[Senate Hearing 110-249]
[From the U.S. Government Publishing Office]
S. Hrg. 110-249
THE ROAD HOME? AN EXAMINATION OF THE
GOALS, COSTS, MANAGEMENT, AND
IMPEDIMENTS FACING LOUISIANA'S
ROAD HOME PROGRAM
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HEARING
before the
AD HOC SUBCOMMITTEE ON DISASTER RECOVERY
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MAY 24, 2007
__________
Available via http://www.access.gpo.gov/congress/senate
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
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36-609 PDF WASHINGTON DC: 2007
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana TOM COBURN, Oklahoma
BARACK OBAMA, Illinois PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri JOHN WARNER, Virginia
JON TESTER, Montana JOHN E. SUNUNU, New Hampshire
Michael L. Alexander, Staff Director
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
AD HOC SUBCOMMITTEE ON DISASTER RECOVERY
MARY L. LANDRIEU, Louisiana, Chairman
THOMAS R. CARPER, Delaware TED STEVENS, Alaska
MARK L. PRYOR, Arkansas PETE V. DOMENICI, New Mexico
Donny Williams, Staff Director
Aprille Raabe, Minority Staff Director
Amanda Fox, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Landrieu............................................. 1
Senator Coburn............................................... 14
Senator Stevens.............................................. 16
Senator Pryor................................................ 20
WITNESSES
Thursday, May 24, 2007
Donald E. Powell, Federal Coordinator for Gulf Coast Rebuilding,
U.S. Department of Homeland Security........................... 5
Andrew D. Kopplin, Executive Director, Louisiana Recovery
Authority...................................................... 8
Walter Thomas, Resident, Lower 9th Ward, New Orleans, Louisiana.. 22
Connie Uddo, Director, St. Paul's Homecoming Center/Beacon of
Hope Resource Center, New Orleans, Louisiana................... 23
Debbie Gordon, President, Chimney Wood Homeowners' Association,
New Orleans, Louisiana......................................... 25
Frank A. Silvestri, Co-Chairman, Citizens' Road Home Action Team
(CHAT), New Orleans, Louisiana................................. 26
Frank A. Trapani, President, New Orleans Metropolitan Association
of Realtors, New Orleans, Louisiana............................ 27
Nelson R. Bregon, Assistant Deputy Secretary for Disaster Policy
and Response, U.S. Department of Housing and Urban Development. 33
David I. Maurstad, Assistant Administrator, Mitigation
Directorate, Federal Emergency Management Agency, U.S.
Department of Homeland Security................................ 34
Susan Elkins, Executive Director, Office of Community
Development, State of Louisiana................................ 35
Isabel Reiff, Senior Vice President, ICF International, Inc., and
Chief Program Executive, Louisiana Road Home Program........... 37
Alphabetical List of Witnesses
Bregon, Nelson R.:
Testimony.................................................... 33
Prepared statement........................................... 113
Elkins, Susan:
Testimony.................................................... 35
Prepared statement with an attachment........................ 123
Gordon, Debbie:
Testimony.................................................... 25
Prepared statement........................................... 93
Kopplin, Andrew D.:
Testimony.................................................... 8
Prepared statement with attachments.......................... 54
Maurstad, David I.:
Testimony.................................................... 34
Prepared statement........................................... 116
Powell, Donald E.:
Testimony.................................................... 5
Prepared statement with an attachment........................ 45
Reiff, Isabel:
Testimony.................................................... 37
Prepared statement with attachments.......................... 135
Silvestri, Frank A.:
Testimony.................................................... 26
Prepared statement with an attachment........................ 96
Thomas, Walter:
Testimony.................................................... 22
Prepared statement........................................... 86
Trapani, Frank A.:
Testimony.................................................... 27
Prepared statement........................................... 111
Uddo, Connie:
Testimony.................................................... 23
Prepared statement........................................... 88
APPENDIX
``Current Housing Unit Damage Estimates, Hurricanes Katrina,
Rita, and Wilma,'' February 12, 2006, submitted for the Record
from Mr. Powell................................................ 151
Dr. Dominique Duval-Diop, Senior Associate, PolicyLink, prepared
statement...................................................... 196
Peg Case, Director, TRAC, letter dated June 8, 2007.............. 201
Questions and responses for the Record from:
Mr. Powell................................................... 204
Mr. Bregon................................................... 219
Letters dated December 13, 2006 and February 6, 2007, submitted
for the Record by Mr. Maurstad................................. 227
THE ROAD HOME? AN EXAMINATION OF THE GOALS, COSTS, MANAGEMENT, AND
IMPEDIMENTS FACING LOUISIANA'S ROAD HOME PROGRAM
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THURSDAY, MAY 24, 2007
U.S. Senate,
Ad Hoc Subcommittee on Disaster Recovery
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 3 p.m., in
Room SD-342, Dirksen Senate Office Building, Hon. Mary
Landrieu, Chairman of the Subcommittee, presiding.
Present: Senators Landrieu, Pryor, and Stevens.
Also Present: Senator Coburn.
OPENING STATEMENT OF CHAIRMAN LANDRIEU
Chairman Landrieu. The hearing of the Subcommittee on
Disaster Recovery will now begin. The Subcommittee will come to
order.
Let me welcome all of you here this afternoon. There has
been a great deal of interest in this particular hearing, and I
am going to begin with my opening statement. It will be a
little bit longer than usual, but I think the circumstances
warrant it. Senator Stevens, my Ranking Member, will be joining
me shortly, and Members will be coming in and out throughout
the afternoon as we are on the floor voting throughout the
afternoon. We will take those votes as they come.
Let me begin by saying that this hearing is not an
investigation. It is an oversight hearing about the Road Home
Program. We say a lot of things about our homes. We say, ``Home
is where the heart is.'' We say, ``You can travel the world to
search for what you need, but when you return home, you will
find it.'' We say, ``There is no place like home.''
The Road Home Program was designed to help the people of
South Louisiana build and return to their homes, to rebuild
their neighborhoods and re-establish a sense of community.
Unfortunately, to date, this program has not lived up to its
billing. Louisianans have moved beyond frustration to cynicism
and hopelessness. Headlines appear in the press on a daily
basis with tag lines like ``Road to Nowhere,'' ``Potholes in
the Road Home,'' ``Road Blocks to the Road Home.''
One might disagree with how the program was developed,
designed, and funded, but it is all we have to work with at
this point, and I intend to see that it begins to work better.
We need to look into the funding levels to see if they are
sufficient and, if not, find a way to make it sufficient.
No single hearing, of course, will remedy this problem.
However, I do intend to get the answers we need to make much
needed improvements. I intend to get answers from the people
responsible for the program. On the first panel we will have
Don Powell representing the Federal Government, primarily
responsible for the design and development of the Gulf Coast
Recovery Plan; and Andy Kopplin, who is representing the State.
And I will introduce them in just a moment.
But here are some questions that I hope our panels today
will be responding to: Why is it that almost 21 months after
the storm and the massive flood, only a little over 13,000
checks have been cut? At this rate, which I will generously
call a thousand closings a month, it will take us another 10
years to get this money to people. Is it the State? Was it the
design? Was it the lateness of the funding?
What was the Federal role in determining the level of
funding for Louisiana's program? What was the State's role in
determining the level of funding for Louisiana's program? What
is the cause of the projected program shortfall? What are the
most pressing concerns facing program participants? Have
contractors, like ICF, contributed to the program's delays?
Have they put in procedures to eliminate some of those delays?
What steps should be taken, either by Louisiana or the Federal
Government, to fix the funding shortfall if we determine there
is one? How has the agreement to use hazard mitigation funding
affected the process of Road Home grants? How can the State and
Federal Government collaborate to resolve the dispute over the
hazard mitigation funding, which is a substantial portion--I
think $1.2 billion--in question?
What role, if any, are the local governments playing in the
management of the hazard mitigation funds which are
traditionally used to help mitigate against future disaster and
help with local funding infrastructure? What is the projected
timeline for all Road Home grants to be disbursed? How is the
duplication of benefits preventing people from getting their
full promises of funding to get their homes and lives underway?
As this Subcommittee probes for answers to these questions,
we also need to establish a bit of context, which I hope we can
do today. The Road Home Program was developed by Governor
Blanco's Administration. The chief architect of the program was
Executive Director Andy Kopplin, who is with us here today. It
was developed through the LRA. It initially asked for $14.9
billion, according to some records I have seen. However, the
Administration said this was too costly. In reaction, the
Administration reduced the amount of the program.
Congress appropriated $10.4 billion in community
development block grants to the State through the third and
fourth Hurricane Katrina supplemental. Then in December 2005,
the State received the first $6.2 billion, and in June,
Louisiana received an additional $4.2 billion.
The reason for this funding source, Congress thought this
funding source was the most flexible and it would be the most
effective tool for both Louisiana and Mississippi to engineer
its own recovery. That flexibility is in question today. The
CDBG funds are administered by the Department of Housing and
Urban Development. My office has heard time and time again that
the use of these funds has been anything but flexible.
Conversations about the plan occur on a daily basis, and change
upon change has been required.
We have the Assistant Secretary of HUD, Nelson Bregon with
us today, along with Susan Elkins, who is responsible for
administering these dollars at the State level. They are what I
call the ``fixit people.'' If it can be fixed, it is going to
be HUD, FEMA, and the CDBG administration at the Federal level
that can fix it, and then Congress or the State can fund it if
it is short.
The LRA decided to use $8.8 billion of CDBG money for the
Road Home Program. The remaining was spent on economic
development, infrastructure, and hazard mitigation. The State
also hoped to use $1.2 billion from FEMA's Hazard Mitigation
Grant Program as part of the budget for the Road Home Program,
and I continue to run into all sorts of explanations as to who
mandated that and why, and we hope to get to the bottom of it.
One of the most immediate problems that the program faces
today is a projected shortfall in funds. This challenge to the
future of Road Home was first aired publicly recently. The
Louisiana congressional delegation has fought very hard to get
full funding, but I have suspected for a long time that our
community development awards were not given out in proportion
to the damage that Louisiana sustained. We will get some facts
in the record on that.
If this was a program that was receiving high marks from
the people it serves, maybe these kinds of errors in
assumptions could be forgiven. But this program is in many
measures not living up to the promises that were made. I hear
stories of unreturned phone calls, a labyrinth of bureaucracies
that make filing appeals and getting simple explanations an
arduous process, and we will hear from our citizens today.
While I understand that the original dollar figures for
Road Home may have been based on uncertain estimates, the State
has a number of questions to answer. Why was the program
designed this way? I hope some of those designs can be
justified. Individuals who opt to leave Louisiana are
penalized. Although there have been some changes made for the
elderly, there are many citizens in the bracket of disabled
citizens that are complaining that they are not exempt from
this penalty and feel like that is unfair. We hope to get some
answers to that.
There are enough challenges within Road Home to hold a
hearing on this every week. I am obviously not going to be able
to do that. But I do hope that the panel will present their
remarks today, beginning with the two people primarily
responsible for the design and funding levels. Of course, that
is not to take away the responsibility of Congress for funding
the overall program. But we relied in large measure on
information given by the Coordinator's office and by your
office, Mr. Kopplin, as to how to appropriate at what level of
funding to help the design of the program.
There has been a slight change to the original outline of
today's hearing, and I wanted to say that I took the liberty of
Chairman earlier this morning to make this change, because one
of the things that I am hoping to get through today is
discussing that moves us away from talking points and closer to
getting to the bottom of the numbers, figures, amounts, and
details in question. And so I asked Mr. Kopplin and he was
willing to join Mr. Powell on the first panel to hear about the
design. Then we will have our homeowners, which I thought was
appropriate, to tell about their personal experiences. The last
panel, which, unfortunately, Mr. Powell is not going to be able
to stay for--and I understood that initially because he is
traveling later today--will be from HUD and FEMA and the
community development program at the State level as to how it
could potentially be fixed. Now, perhaps it is working as the
designers intended. But I would like to believe that we could
get help to people sooner. I would like to believe that the
program will be fully funded and promises fully met. And that
is what the hearing is about today.
So, Mr. Powell, if you do not mind, we will start with you.
As I said, Senator Stevens will be joining us in just a moment.
Let me briefly introduce our first two panelists. We have
received their testimony in good order, and I appreciate it
because, unfortunately, we did not receive the FEMA testimony
until 2 hours ago. There is a requirement that testimony be
turned in to this Subcommittee 24 hours in advance, and I want
it noted we did not receive the testimony from FEMA until about
2 hours ago.
We did receive both of your testimonies on time. They have
been thoroughly read and reviewed, and I would like to
introduce Mr. Powell at this time for his opening remarks. He
was named Federal Coordinator for Gulf Coast Rebuilding on
November 1, 2005, by President Bush. He has been tasked with
the job of developing of a long-term plan for the region in the
aftermath, with development a long-term rebuilding plan for the
regions affected by Hurricanes Katrina, Rita, and Wilma. He
also works to coordinate the Federal efforts and help State and
local officials reach consensus on their vision for the region.
Prior to serving as the Coordinator, Mr. Powell served as the
18th Chairman of the Federal Deposit Insurance Corporation, a
position he held since August 2001.
The next witness will be Andy Kopplin, Executive Director,
Louisiana Recovery Authority (LRA), an agency which was
developed a few weeks after Hurricanes Katrina and Rita struck
Louisiana, Texas, and Mississippi coasts and the massive flood
that ensued by a collapse of the Federal levee system, which
flooded a great deal of southeast Louisiana. To act as the
leadership on the massive recovery effort has basically been
his position. He is represented by the State entity, which is
the LRA, which was designed to basically represent the State in
this recovery. Prior to that, he served as Chief of Staff to
Governor Blanco and before that to Governor Foster.
So, with that, Mr. Powell, if you will begin, I think we
are going to provide 5 minutes for opening statements, and then
we will have a series of questions, and the same to you, Mr.
Kopplin.
TESTIMONY OF DONALD E. POWELL,\1\ FEDERAL COORDINATOR FOR GULF
COAST REBUILDING, U.S. DEPARTMENT OF HOMELAND SECURITY
Mr. Powell. Thank you, Senator. Good afternoon,
Subcommittee Chairman Landrieu, Ranking Member Stevens, and
distinguished Members of the Senate Homeland Security and
Governmental Affairs Subcommittee on Disaster Recovery. My name
is Don Powell, and I am pleased to appear here before you today
as the Federal Coordinator of the Gulf Coast Recovery. I am
here today to discuss the Blanco Road Home Program,
specifically its current financial status.
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\1\ The prepared statement of Mr. Powell appears in the Appendix on
page 45.
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By way of history, just after I took the post as Federal
Coordinator, my staff and representatives from the State of
Louisiana began exhaustive talks to determine possible
additional need beyond the $6.2 billion allocated to
Louisiana--the maximum amount as allowed by statute in December
2005. My charge was clear: Gather the best available data, put
all the information on the table for review. After many weeks
of discussion and by using scientific methods like National
Oceanic and Atmospheric Administration estimates on flood depth
levels, FEMA and U.S. Geological Survey on areas of maximum
flood and storm surge inundation, FEMA remote sensing data, SBA
loss verification information, FEMA inspections, and HUD data,
all parties involved in the discussions--Federal, State, and
the State's own independent demographer--reached a consensus on
the total number of houses destroyed by flood damage and an
approximate cost per household.
I would like to emphasize that at no point did I receive
guidance from the White House, Congress, or other Federal
agencies or impart to my staff that we had a ``go'' amount of
funding that we should find a way to reach. This truly was a
good-faith and fully open negotiation with the State, the LRA,
and their consultant, McKinsey and Company, to meet the needs
of the people of Louisiana.
After intense but open negotiation with all the State
representatives, we all agreed that $4.2 billion would be the
appropriate amount of additional funding to meet the
outstanding needs, and soon thereafter the President requested
$4.2 billion in February 2006 as part of the fourth
supplemental. In fact, at the time of the President's
announcement to seek the additional $4.2 billion, Governor
Blanco stated, ``Now, I want to say that these numbers didn't
just come from the sky. They were carefully crafted legitimate
numbers, analysis after analysis, evidence after evidence. We
took it seriously. We didn't just make up a number. We know
that that doesn't fly here in Washington.''
``Today I know that he''--the President--``is fully
committed to helping our people. And so on behalf of the people
of Louisiana, I have to say a very special thank you.''
Further questions have been raised as to whether or not the
State understood or agreed to focus on flood damage. I would
like to address those questions.
The focus of the Administration after the 2005 hurricane
season was and remains flood-damaged homes from either levee
failures, like in New Orleans, or storm surge, as experienced
by some in southwest Louisiana and Mississippi. We were always
very clear that the Federal Government would not fund State
housing programs to cover wind damage. To that end, if a
State's program were to include wind, there would not be
Federal funding for that purpose.
In February 2006, we mutually agreed with the State to fund
106,000 homes that experienced major and severe flood damage at
an average grant of $72,000, thereby creating a $7.6 billion
program. This funding outline was a result of intensive due
diligence in Baton Rouge for which I deployed staff to work
with all the State and Federal partners to reach consensus. The
flood-damaged housing program was a key component of the
President's $4.2 billion supplemental request as described in
his submission to the Congress and which other White House
communications documented as directed specifically to New
Orleans because of its unique needs related to flood
mitigation.
Shortly thereafter, in March 2006, the LRA itself published
their own defense of the supplemental request entitled
``Louisiana's Case for an Additional $4.2 Billion in CDBG,''
which demonstrated a program that only compensated for flood
damage. Their breakout outlines 102,000 flood-damaged homes at
$69,000 per house to establish a $7.1 billion program with an
extra $400 million left over for the State to use for
administrative costs. All told, a $7.5 billion program.
This program, which prioritized the most flooded,
devastated areas, was our consensus, and the way it was
described to you, the Members of Congress, who approved this
funding. The Federal Government did not fund State programs to
cover all wind damage in Texas, Mississippi, Alabama, or
Florida, despite numerous requests by many of these States to
do so after the 2005 hurricane season. In fact, if Texas were
to run the same program as Louisiana based upon the same data
that the current Louisiana estimates are based, the Federal
Government would need to increase its allocation to that State
by almost 14 times, or another $645 million to Texas alone.
The truly unique nature of the storms of 2005 and the
driver of the Federal Government to get involved was the flood
damage caused by the storm surge and levee breaches. This is
damage for which there is no private insurance market, damage
that in many cases was experienced by those who lived outside
of the federally identified floodplains and/or those who lived
inside Federal levees. Therefore, despite the original intent
and purpose of the CDBG funding, the State utilized the
autonomy available to them to push through their own program
design to compensate damaged homes, whether by wind or flood,
unlike any other Gulf Coast State.
In the LRA final Road Home plan sent to HUD for its review
in August 2006, the State had unilaterally, independently, and
fundamentally made changes. They projected 114,532 homes
destroyed by either wind or flood. In a nutshell, the action
plan ultimately submitted to HUD by the LRA Road Home Program
outlined a budget that significantly reduced the average payout
per home from $72,000 to $60,000 while significantly increasing
the number of eligible applicants from 106,500 to almost
115,000. This was possible because, despite Administration
attempts to allow the HUD Secretary the authority to deny or
approve any action plan submitted by the State, Congress
instead gave the Secretary only the authority to review the
plan for CDBG program compliance, not opine on the plan being
right or wrong.
Unfortunately, these estimates have proven inaccurate.
After media reports provided my first indication that the Road
Home Program was running out of funds, I asked Governor Blanco
to send me all relevant Road Home data after a meeting on May
9, 2007. We have worked with HUD to evaluate this data and
better understand the causes of the perceived shortfall.
I am here today to tell you our findings. We have verified
the State's midpoint estimates that indicate there may be
132,000 eligible applicants and the average grant is
approximately $74,000. This has caused the program's potential
overall costs to rise to nearly $10 billion--far greater than
the taxpayer dollars given by Congress to compensate flood-
damaged homes. From HUD's midpoint projection using the State's
data, it seems that there are 88,702 flood-damaged homes and
43,298 applicants that have suffered wind damage. The midpoint
projections are that approximately $2.7 billion of the $9.6
billion midpoint estimate will be paid to those who did not
experience any form of flood damage. In fact, midpoint
estimates have fewer grantees projected from the slower
recovering flood-damaged areas.
As elected officials have said many times, the Federal
Government is responsible for this hurricane damage because of
the failure of the levee system and now nearly half of the
Federal funding is going to homeowners that experienced no
levee-related damage. I am sure this is disheartening news for
people like Walter Thomas from the 9th Ward, who also will be
here to testify today. Postal Service data also confirms that
while those in levee-protected areas only make up 60 percent of
the total Road Home estimated applicants, they are
overwhelmingly less like to have returned home.
I need to reiterate that these figures are midpoint
estimates. Until the State closes the application process, we
will not be able to definitely determine the total cost of the
program. Our evaluation has also uncovered other concerns. For
instance, the Elevation Grant Program, designed and
administered by the State, has cost $2 billion. The maximum
amount a homeowner can receive is $30,000, and the average
grant is $24,000. It appears that less than a quarter of the
people who are receiving the grant are actually legally
required to elevate. This is because the State has not limited
the program to those whose parish-determined damage level
requires them to rebuild in compliance with elevation standards
to receive coverage from the National Flood Insurance Program.
I am not here to suggest that elevating your home is not a
safer way to rebuild, but I do not see a mechanism by which the
State can ensure the elevation grant monies will actually be
used for elevation.
Chairman Landrieu. Could you please wrap up in the next 30
seconds?
Mr. Powell. I will. Like you, I am concerned for the people
of Louisiana. Unfortunately, although our office conducts a
weekly call with representatives of the LRA, State ICF, and all
the Federal partners involved in housing, this issue of
perceived shortfall was never raised. Given the amount of
spending which is targeted for administrative cost, I am at a
loss as to why this was not made clear to either the governor
or the LRA earlier.
I am committed to working with the State in an examination
of all resources priorities for the people of Louisiana.
Through this process all resources must be taken into account,
and I will not let up until we have determined the best path
forward for the State's Road Home Program.
Thank you.
Chairman Landrieu. Thank you. Mr. Kopplin.
TESTIMONY OF ANDREW D. KOPPLIN,\1\ EXECUTIVE DIRECTOR,
LOUISIANA RECOVERY AUTHORITY
Mr. Kopplin. Madam Chairman, Senator Coburn----
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\1\ The prepared statement of Mr. Kopplin appears in the Appendix
on page 54.
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Chairman Landrieu. Let me please stop you. Let me recognize
my colleague, Senator Coburn from Oklahoma. He is not a Member
of this Subcommittee, but he is most certainly welcome, and I
look forward to turning to him at the appropriate time for
questions. Thank you, Mr. Kopplin.
Mr. Kopplin. My name is Andy Kopplin, and it has been my
privilege to serve as the Executive Director of the Louisiana
Recovery Authority, representing our Chairman Dr. Norman
Francis, our Vice Chairman Walter Isaacson, and the other
volunteers on our bipartisan board of directors.
Since our appointment by Governor Blanco in October 2005,
we have focused on developing strategies for recovery, securing
resources, and providing transparency and oversight on the
expenditure of recovery dollars. We do not run the Road Home or
any programs at the LRA. Our job is to make expenditure
recommendations of Federal grant funds to the governor and the
Louisiana Legislature and to set broad policies for the
programs they approve.
As I address specifics about the Road Home Program, let me
put them in the context of some major themes that illustrate
the challenges we have faced with our recovery.
First, Federal investments in our recovery have been
generous and unprecedented, but they have been late in coming,
inequitable based on damages, and insufficient.
Second, program implementation responsibilities have been
delegated to State-level agencies, largely because the Bush
Administration opposed the Baker-Landrieu proposal for a robust
Federal agency with the mandate and resources commensurate to
dealing with the first and third most expensive disasters in
American history.
Third, the red tape associated with FEMA- and HUD-funded
programs is choking our ability to access Federal dollars
appropriated by Congress.
And, fourth, the constant haggling required by State and
local officials to secure resources and cut red tape has
undermined public confidence and slowed the recovery.
On Federal investments after Hurricanes Katrina and Rita,
the 109th Congress waited until Christmas to fund a recovery
package, then capped Louisiana's allocation at 54 percent of
the total CDBG appropriation, even though we had 77 percent of
the housing damage. With leadership from Governor Blanco and
our delegation, we fought for fair and equitable funding. LRA
board members personally took the case to Capitol Hill and the
White House. Our request during these negotiations had been for
a total of $14.9 billion in CDBG funds, including $9.4 billion
for single-family homeowners. After vigorous negotiations, Mr.
Powell announced the President's support for an additional $4.2
billion in CDBG funds to bring Louisiana's total to $10.4
billion. This included $7.5 billion for homeowners based on
FEMA's estimate that Louisiana had 123,000 homeowners who had
suffered major or severe damage. Mr. Powell also asked us to
rely on the $1.7 billion in hazard mitigation funds to pay for
elevations, buyouts, and smaller home safety investments in
meeting the needs we identified in the negotiations. We knew
the HMGP funding came with considerable administrative burdens,
but as Governor Blanco often says, when you are negotiating
with the folks holding the checkbook, you tend to agree with
their numbers. Mr. Powell also committed to helping us
streamline the FEMA process.
It was not until 10 months after Hurricane Katrina that
this bill to fund our program with an additional $4.2 billion
was signed by President Bush. And so for homeowners like the
ones behind us, waiting for grants 21 months after the storm,
it provides little solace for them to hear that half of their
wait was on the 109th Congress to fully fund the program. But
any fair review of progress needs to consider June 2006 as the
start date--a date that for most homeowners was already too
late.
The program has finally begun hitting its stride. By the
end of today 20,000 homeowners will have closed on their
grants--double the number who had closed just 4 weeks ago. Yet
just as this news of improvement arrives, the program has been
covered by a cloud of uncertainty again due to anticipated
budgetary shortfalls. ICF International, the Division of
Administration Office of Community Development's contractor for
the Road Home Program, has developed a budget projection that
estimates the total program costs of approximately $10.4
billion--or $2.9 billion beyond what was budgeted. If the $1.2
billion in hazard mitigation funds are not approved by FEMA,
this shortfall grows to $4.1 billion.
ICF's projection shows this deficit results largely from
two factors: First, nearly 20,000 more homeowners than FEMA
estimated are eligible for grants; and second, average awards
are higher than had been initially projected. ICF's inspectors
are finding many homes FEMA labeled with ``major'' damage
should have been categorized as ``severe,'' warranting a
complete demolition and rebuild.
Governor Blanco has asked the LRA to consider temporarily
reallocating other CDBG funds to shore up the Road Home
Program. As homeownership has been our highest priority, we
will do what is necessary. But even a temporary reallocation of
other funds will not be sufficient to cover the projected
shortfall. Because the $1.2 billion of HMGP funds have not been
approved either, elevations and other mitigation measures must
be paid for by CDBG funds or discontinued.
Given that this budget shortfall is due to our good-faith
reliance on FEMA data and that Louisiana's total CDBG
allocation was never based proportionally on damages with other
States, we believe that additional Federal CDBG funding to
support the Road Home Program is clearly warranted, and we ask
for your thoughtful consideration and support of this request.
Remember, Louisiana suffered an estimated $100 billion in
physical damages. After Federal investments and insurance are
counted, we are still left with an estimated $34 billion in
unrecovered losses. So, in President Bush's words, to do what
it takes to rebuild Louisiana after such devastating losses
will require short-term investments to shore up the Road Home
Programand long-term investments in our community's
infrastructure. When the President said he would do what it
takes and stay as long as it takes, he didn't say ``except if
you had wind damage.'' And I will point out that in this
document, our Road Home application, which was sent to FEMA and
approved--not sent to FEMA--sent to HUD and approved in June
2006, it very clearly stated it is the State policy that
participants in the Homeowner Assistance Program deserve a fair
and independent estimate of projected damages from the storm,
regardless of the cause of damage. That has been our policy
since the beginning. We did not want to discriminate between
the type of damage homeowners who were hit by Hurricanes
Katrina or Rita suffered after the storm.
Chairman Landrieu. Thirty seconds.
Mr. Kopplin. We have been working to make sure that the
Road Home Program speeds up. I want to compliment Walter Leger,
who is behind me, who has been LRA's volunteer Housing Task
Force Chairman, who spent hours of volunteer hours working on
solutions. I want to compliment the folks running the program
who have sped up the number of closings, again, doubled the
number of closings in the last 4 weeks.
As I have noted, with the Federal match waiver that this
Congress is moving forward, that will provide a significant
infusion of assistance to Louisiana as we move forward in
solving the Road Home shortfall, and I look forward to working,
Madam Chairman, with you and the Members of Congress to make
sure that every single homeowner who is eligible for our
approved program gets their grant and gets it as quickly as
possible.
Thank you very much.
Chairman Landrieu. Thank you. We will begin, if we can, a
round of questions, and I will take the first few, and we have
been joined by Senator Stevens, the Ranking Member, who is no
stranger to disaster recoveries and has helped to lead many
efforts here in Congress over his long and distinguished
tenure.
There were many numbers thrown out about homes with wind
damage and flood damage, and I checked these numbers just 2
hours before I came in through CRS, which is our Congressional
Research Service, and I want to make sure that I have these
numbers correct, because I think beginning with the right
numbers and building back might help us to figure out what the
entities were thinking as we began to figure out where we need
to go. So these are simple, but they are accurate based on my
checking this morning.
Mr. Powell, this is mostly directed to you, if I could.
If you take the 63,000 homes severely damaged or destroyed
by Hurricane Katrina in Mississippi and multiply it by $150,000
per household, that number would come to around $9 billion.
Subtracting insurance payments and other Federal assistance,
FEMA disaster assistance, the $5.5 billion that Mississippi
received seems close to sort of what they got to begin to put a
program of this magnitude together.
However, if you take the same 205,000 severely damaged or
destroyed homes in Louisiana, multiply it by $150,000, which is
sort of the general promise, you come up with a need for $30.7
billion.
Now, these are big numbers, but in my mind, I am trying to
find a way to communicate this as simply as I can to get past
all the mumbo-jumbo about flood or wind or who was in the
floodplain or who was not. The way this program has been talked
about by many is a basic grant program to homeowners--not
renters but homeowners--who experienced severe damage. The
testimony this morning is, well, now we are talking about flood
only, not wind. But that has never come directly to my
attention until today.
But set that aside for a moment. Do both of you agree or
what is the disagreement about these numbers? And if you made
these calculations initially, as you were designing this
program, how could you possibly think that the $10 to $12
billion allocated in community development block grant
initially, even if half of it was 6 months past the date of the
Mississippi final numbers, would even be adequate to begin to
cover a program that both of you have sort of outlined, but in
different ways?
Mr. Powell, will you take that question?
Mr. Powell. I am happy to, Senator.
Chairman Landrieu. And then Mr. Kopplin.
Mr. Powell. Our office was birthed about the time Congress
allocated the $11.5 billion CDBG money to the States along the
Gulf Coast that were damaged by Hurricanes Katrina and Rita. So
those negotiations were really done in Congress, and as someone
pointed out, they were limited where no one State could receive
more than 54 percent. That was a decision made by Congress.
And, incidentally, they did not limit that to Louisiana. They
gave the Secretary of HUD the discretion where he could not
exceed more than 50 percent. He quickly went and gave Louisiana
54 percent. It could have been 30 percent, it could have been
40 percent.
Chairman Landrieu. But let us be clear, and if you do not
mind, I think this is a very important point of trying to get
these numbers. You just testified that you did not come on
board until after a figure of $11 billion was determined.
Mr. Powell. Eleven-and-a-half billion dollars.
Chairman Landrieu. Approximately the same time.
Mr. Powell. I am getting to it.
Chairman Landrieu. OK.
Mr. Powell. After that, and clearly people in Louisiana
contacted our office, as well as other Members of Congress and
the Administration, that they felt like they needed more money.
That is when the discussions started in December in our office
with the people of the LRA: How much more money do you need? So
we focused on what we focused on from the very beginning and
historically what CDBG money has been used for, a catastrophic
event like this, and we focused on those homes that had major
and severe damage by flood--breach of the levee system and the
storm surge. And, incidentally, Mississippi did not receive any
money for wind damage. So we focused on what was caused by the
breach and what was caused by the storm surge.
With consensus, and with using the best available data,
science--I am an old banker. I want to see the numbers. I do
not want to guess. And as Governor Blanco said, these numbers
did not come from the sky. It was after a lot of deliberation,
a lot of investigation, independent and consensus with our
friends from Louisiana, we came to the 106,000 number. We then
said what is going to be the average payout, and we did not use
$150,000 because that was the cap, as you know, Senator. So we
used the best available data we had from SBA, from FEMA, from
private insurance companies, from other people, and we
determined how many folks would take the buyout, what would it
cost to repair the damage. Came up with a consensus number of
$72,000, thus the $7.6 billion, and, therefore----
Chairman Landrieu. But you thought at the time----
Mr. Powell [continuing]. This President then immediately,
after we told him this, asked Congress for an additional $4.2
billion based upon a consensus of the data between our office
and the people in Louisiana.
Chairman Landrieu. OK. But let me just get clear about one
thing. When you said a consensus, I can see you are speaking,
and Mr. Kopplin's head going this way, so I do not--I think
anybody observing this, there is no consensus, it seems, which
is what we are trying to get to here. But when you just
outlined those numbers, you are now testifying that--what did
you say?--123? What was the number you gave?
Mr. Powell. I said 106,000.
Chairman Landrieu. The 106,000 was for flood only, not
wind.
Mr. Powell. Flood only, major and severe.
Chairman Landrieu. Flood only. Was it your understanding
that it was flood only, Mr. Kopplin?
Mr. Kopplin. In negotiating, we had a lot of things that we
requested. They had their reasons for knocking certain things
off those negotiations. When the money was being negotiated, it
was based on the FEMA data that Mr. Powell's office provided to
us with FEMA and HUD input. That was 123,000 homeowners,
106,000 flooded and the remainder with wind damage. We chose to
design a program to cover all 123,000. What we have today is
that FEMA number was low in terms of the number of major and
severe damaged households in Louisiana and low in terms of the
level of damage per household, which has led to the problems.
We relied on that FEMA 123,000 estimate, which turned out to be
low in terms of the number and amount of damage Louisiana
homeowners suffered.
Chairman Landrieu. And what is the real estimate from your
vantage point now? Or what do you think the accurate updated
estimate is?
Mr. Kopplin. The estimate provided by ICF in their analysis
has a midpoint of about 132,000 potentially eligible applicants
for the Road Home Program, but as Mr. Powell indicated, because
we have not chosen to tell people who are located all over the
country there is a deadline by which you have to have applied
by last summer or something like that, we are still accepting
applications, because our goal has been to make sure every
homeowner who is eligible, wherever they may be, gets to apply
and gets their accurate grant.
Mr. Powell. Senator, I would just----
Chairman Landrieu. Go ahead.
Mr. Powell [continuing]. Emphasize that these numbers are
not low for flood damage. In fact, they are lower than what we
originally estimated. And I would also add that we did not just
use FEMA and HUD. We used satellite imaging. We looked at SBA
loss totals. We did a lot of cross-checking. And their own
demographer, the State's, agreed with our consensus that we
came up with.
Chairman Landrieu. But getting back to the statement, Mr.
Powell, that you made about stepping in sort of after the money
had been allocated, and then we kind of pushed past this 54-
percent cap, I understand, because I am an appropriator, that
cap was placed by the Appropriations Committee. I objected to
it then and continue to object to it today, but it was
something that we could not fix at the time. But did that 54-
percent cap have anything to do with the estimates that we are
talking about today? Or do you know how that 54 percent----
Mr. Powell. No.
Chairman Landrieu. Was it based on anything?
Mr. Powell. We looked at what were the needs of the people
of Louisiana as it related to----
Chairman Landrieu. Did you recommend that cap, the 54
percent?
Mr. Powell. No, ma'am. And after that cap was done, then we
began to look, what are the needs of the people in Louisiana,
with a priority toward those that experienced flood damage as a
result of the levee breach and the storm surge. We did not look
at that--we had a clean sheet of paper and said what additional
monies does Louisiana need. We knew, because of the 54 percent,
what Louisiana was going to receive, and so we said--I said,
``Give me the facts.'' As my testimony indicated, give me the
facts, and I was not governed by anyone telling me what or what
not to do.
Chairman Landrieu. And I appreciate that you have tried to
be an honest broker, and I have said publicly and privately it
has been good to work with you. And I think the governors of
both States have been very complimentary of your efforts. But
our job here is to get to the bottom of how this program seems
to be billions of dollars short. Are we covering wind or flood?
If not, are we doing that for Louisiana and Mississippi on an
equal basis? And if not, how are we going to find the funding
that this program seems to be lacking? And there are many other
issues, as I said in my opening statement, accelerating it,
moving through the red tape.
Now, I want to honor my colleagues that are here. I am
going to stop my questions. I will have another round and go to
Senator Coburn, who will have some questions for you, and then
Senator Stevens.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. I would be happy to yield to the Ranking
Member.
Chairman Landrieu. No, he is----
Senator Coburn. A couple of questions. On the revised
132,000, what percentage of that is flood and what percentage
of it is wind, Mr. Kopplin?
Mr. Kopplin. We have not had the chance to evaluate Mr.
Powell's analysis, which we just received this morning. Our
assumption is that the distribution of households is consistent
with what it was when there was 123,000 severe and major
damaged households, of which 106,000 were flood.
Senator Coburn. But you think it would be about the same
percentage?
Mr. Kopplin. That has been our assumption. Again, this was
data that was constructed by FEMA, as Mr. Powell said,
satellite imagery. What we have now is inspections by actual
inspectors who have gone and looked at every one of these
houses. So we have a lot greater detail house by house than we
even did with that data during those negotiations.
Senator Coburn. Are there any houses outside of what the
satellite imagery showed that there was no flood, any of those
receiving these funds for flood damage that are not wind
damage?
Mr. Kopplin. Our program covers hurricane damage, whether
from flood or from wind. If you had uninsured damage----
Senator Coburn. I am saying other than wind damage. If
there are homes that were outside a satellite photo that shows
there is no flood damage, are there any homes receiving funds
for flood damage?
Mr. Kopplin. I think the answer to your question is yes,
sir, that there are homes that got damaged by the hurricane,
whether they were in a floodplain, out of a floodplain----
Senator Coburn. Yes, but that is not the question I am
asking you.
Mr. Kopplin. I am not sure I understand.
Senator Coburn. I am asking you if there is data that says
there was no flood here by satellite imagery, are there homes
outside of the flood damage area, which is proven, what you can
see on satellite, where the water went, are there homes that
are receiving money for flood damage, not wind damage?
Mr. Kopplin. I do not know the answer, but I do know that
homes are being covered whether they had flood or wind damage,
or both, from the hurricane. And wherever they are in
Louisiana, it is our commitment to try to help those homeowners
cover that uninsured gap through this program.
Mr. Powell. Senator, I know that there are checks going to
Bossier and Caddo, the farthest northwest----
Senator Coburn. Why is it that not just in those counties--
in Franklin, Washington, Caddo, Concordia--why are funds going
to those parishes out of this money that were not involved in
this at all?
Mr. Kopplin. If there are homeowners who suffered major or
severe hurricane damage--and my guess is they are in the single
digits, if there are, in some of those parishes. If they had
hurricane damage, our policy was, whether you happen to be
unlucky in Caddo Parish or you happen to be unlucky in Cameron
Parish and you had hurricane damage, we want to cover your
uninsured damages. It is our choice to make that policy
decision. It was avidly----
Senator Coburn. I agree.
Mr. Kopplin [continuing]. Sought by the members of our
congressional delegation and our legislature to make sure that
we were equitable between wind and flood, Hurricanes Katrina
and Rita, which hit our State 3\1/2\ weeks apart.
Senator Coburn. But you do understand Mr. Powell's point
that he made is that, in terms of equitable treatment of all
the other States, we in the past have not covered wind damage.
So I have two other questions----
Mr. Kopplin. But, Senator, if I might, Mississippi, with
$5.4 billion of CDBG grants, has enough money to cover wind and
flood, should they choose to do so.
Senator Coburn. All right. One of my problems is the real
Federal priority here, besides helping Louisiana recover, is--
what we should really be responsible for is the failure of the
levees. There were errors.
Mr. Kopplin. Yes, sir.
Senator Coburn. They caused tremendous heartache,
tremendous human loss, and tremendous material cost. Other than
that, what about private insurance in this thing? Where does it
fit in for damage, wind damage, etc., off the coast? I am just
saying, Where is the private insurance money in this program?
Mr. Kopplin. Private insurance is, both by our State policy
and by Federal requirements, required to be deducted from the
level of grants that we calculate. So the contractor calculates
the level of damage, takes the private insurance money or the
FEMA payments, deducts that, and so it is a net of what you got
in private insurance, which is another reason why I would be
surprised--I was surprised by this number that Mr. Powell has
brought forward, that there is $2.6 billion worth of uncovered
wind damage in terms of that uninsured gap.
Senator Coburn. OK. Just to clarify things, in Louisiana's
original calculations, did you all include wind damage?
Mr. Kopplin. Yes, sir.
Senator Coburn. In your original submissions, wind damage
was included.
Mr. Kopplin. In our initial submissions to HUD, in our
initial negotiations with Mr. Powell, we proposed the coverage
of wind damage.
Senator Coburn. And I just have one last question.
Louisiana has a surplus of $2 billion. They also have $400
million that was set aside for special industrial development.
Why shouldn't the rest of the taxpayers in America say use some
of that, especially--or maybe even use it on an interim basis
while we are disputing this here? Why shouldn't that go on and
be used in anticipation that maybe something in the future will
come from Congress? What is happening on that front in the
State of Louisiana?
Mr. Kopplin. As part of my testimony--and there is a letter
from Governor Blanco--$4.6 billion of Louisiana taxpayer funds
have been invested in or are proposed during this current
budget cycle for investment in hurricane recovery and a variety
of issues, from health care to education to insurance coverage,
to make homeownership insurance more affordable. So there is a
significant State investment being placed already.
Senator Coburn. I agree, but Louisiana has surplus and our
grandchildren have a $350 billion deficit this year. So, again,
the question should be that the average American is going to
say is we have sent a lot of money to Louisiana and we are
going to send more. There is no question we are going to help.
But Louisiana should not be running a surplus and asking
Washington to fill in the difference.
Mr. Kopplin. I would suggest, because we have been fiscally
responsible with our budget in Louisiana and are running a
surplus, we ought to be complimented for that. We ought to note
the $4.6 billion that has been invested or proposed for
investment. It is a significant contribution when a State of
Louisiana's size has about an $8 billion State general fund
budget. So $4.6 billion being invested in hurricane recovery, I
think, is a substantial investment. I would remind you we are
107,000 jobs down in the New Orleans area; $11.5 billion was
lost from Louisiana's economy the year after the storm; and we
have $34 billion in unrecovered losses against that $2 billion
surplus. There are----
Senator Coburn. I understand all that.
Mr. Kopplin [continuing]. Significant needs----
Senator Coburn. I still think you are going to have a
difficult time selling the average taxpayer in this country to
say that you are running a surplus and you cannot do the things
there and we need to come do it and we are going to borrow it
from everybody's grandkids to do it. I think that is a
debatable point. I think it is admirable you all run a surplus.
I think that is great. But if that surplus is there, it ought
to be going to help the people in Louisiana now, not sitting in
the bank.
Mr. Kopplin. The State surplus came from all over the
State, and we are investing significantly in our recovery with
that money.
Senator Coburn. All right. I have some questions for Mr.
Powell, but I think I will just submit them to the record so we
can speed this up, if we can.
Chairman Landrieu. Thank you very much. Senator Stevens.
OPENING STATEMENT OF SENATOR STEVENS
Senator Stevens. Thank you very much, and I am sorry to be
late, Madam Chairman. We had a distinguished visitor from
China, Madam Wu, and I was with the leaders with her.
I am a little bit confused about one thing. Are these
estimates, the 132,000, the 123,000, the 106,000, are they
estimates of the homes that have been damaged?
Mr. Kopplin. The 123,000 homes were estimates based on
FEMA, based on satellite. Now our projections are based in part
on 96,000 actual home inspections by a trained home inspector
for the program. So we think that those particular data sets
are quite a bit better than what was used in the negotiations
last February with Mr. Powell.
I would just point out that Mr. Leger behind me had 7-foot
on satellite----
Senator Stevens. I have only a short period of time. Just
please answer the question?
Mr. Kopplin. Yes, sir.
Senator Stevens. We had terrible disasters up our way, the
largest earthquake on the North American continent. We had
enormous floods and fires. When we make estimates of the homes
that have been destroyed and businesses destroyed, but then
when we come to the program we find that a lot of people have
packed up and gone and they are not coming back.
Now, have you found out how many of those homeowners or
previous occupants want them rebuilt?
Mr. Kopplin. A significant number, and you will hear from
some----
Senator Stevens. Have you found out how many? Do you have
applicants for these?
Mr. Kopplin. In the program, about 85 percent--and the
program staff can get this specifically. But about 85 percent
are taking Option 1, which is to repair or rebuild their house
in Louisiana--Option 1 or 2.
Senator Stevens. Documents have been filed with you?
Mr. Kopplin. Yes, sir.
Senator Stevens. Not estimates.
Mr. Kopplin. That is actual documents filed, yes, sir.
Senator Stevens. That is pretty high compared to some of
our disasters, because people, when they have gone through
really bad disasters, they decide to move somewhere else, and
they are not coming back. I understand the Governor's Road Home
Program, but have you actually contacted people who moved
somewhere else and said, ``Are you coming back?'' Do you know
how many are actually coming back?
Mr. Kopplin. Well, I think the best data we have are actual
Road Home applications where they have signed up and said, ``I
am choosing to repair my house in Louisiana.'' I think the
number is 80 to 85 percent of the folks have chosen that Option
1.
Senator Stevens. Of which number: 132, 123, or 106?
Mr. Kopplin. I think it is--none of the above. It is of
actual applicants who have selected their option for us, and I
think that number is something on the order of 45,000 right now
have filed.
Senator Stevens. Well, that is what I am getting at. We are
not at a numbers crunch yet. We are at a numbers crunch because
of your estimates of how much it is going to cost to do them
all, right?
Mr. Kopplin. Right.
Senator Stevens. What is your plan right now of how much
money you need in this fiscal year?
Mr. Kopplin. We believe that about $750 million to $1
billion per month will be awarded going forward over the next 6
or 7 months to meet the current level of applicants that we
have got.
Senator Stevens. But you have got that money, right? You do
not need any help with that. You have got that, right?
Mr. Kopplin. We have got $6.3 billion of CDBG allocated to
it. We have got $1.2 billion from FEMA that we cannot use yet
because they have not approved it. And with those two, that is
a $7.5 billion budget. We have got an estimated projected
program cost of $10.4 billion, so we are short right now $2.9
billion, without reallocating other money in the CDBG----
Senator Stevens. How can that be? We covered the estimate
of 106,000.
Mr. Kopplin. You covered the estimate for 106,000, and we
designed a program to cover--with lower grants than were
initially decided, to cover the wind damage that Mr. Powell
would not agree to fund. But the FEMA estimates from back in
February are low in terms of the number of houses who had major
and severe damage and low in terms of the damage per house.
Senator Stevens. How many did they estimate back then that
people would actually seek a replacement or repair?
Mr. Kopplin. I am sorry?
Senator Stevens. How many did FEMA actually estimate would
seek repair? How many homeowners did they----
Mr. Kopplin. We estimated that 95 percent of eligible
applicants would participate in the program, so about a hundred
and----
Senator Stevens. I am not talking about eligible
applicants. I am talking about people who were in those homes
before the incident. How many of them were going to come back?
You said 85 percent, right?
Mr. Kopplin. We estimated that 85 percent, approximately,
are choosing the repair or rebuild option.
Senator Stevens. That is of applicants. Now, we are still
missing each other. I am trying to compare the number of people
that are making application to those that were there before the
incident. All right?
Mr. Kopplin. And I believe, Senator, that it is
approximately 85 percent. Whether it is the people who have
filed so far or the people who have applied so far, we will
still hit about that 85 percent. It has been consistent with
every measure so far.
Chairman Landrieu. People that were there before.
Senator Stevens. If that is the case, why are you short of
money now?
Mr. Kopplin. Because the program criteria was that you had
to have major or severe damage as estimated by FEMA, and it
turns out that the 123,000 major or severe damaged houses that
we used as the baseline at Mr. Powell's request, because it was
the best data we had at the time, is short by about 20,000
houses in Louisiana, and the average level of damage is
significantly higher than those FEMA estimates projected. We
have about 70 percent severe damage in reality, whereas FEMA
projected 52 percent severe damage.
Senator Stevens. Well, I said when I went down there right
after the incident--that I have seen World War II, I have seen
a lot of damage in my day. I have seen damage from our
earthquakes and fires. I have never seen anything like this
one.
But, on the other hand, I also saw block after block after
block totally destroyed, and those people are somewhere else
now. Are you telling us you believe 85 percent of those people
are going to come back?
Mr. Kopplin. They are going to come back and repair their
houses, and you will hear from some of them this afternoon who
are fighting to do that.
Senator Stevens. There is nothing to repair. What I saw,
there was nothing to repair.
Chairman Landrieu. But rebuild.
Mr. Kopplin. Well, they can rebuild them. The grants cover
rebuilding as well, and in many cases, that is a better option.
Senator Stevens. How many have you actually rebuilt so far?
Mr. Kopplin. Twenty thousand grants at the end of today
will have been distributed.
Chairman Landrieu. But rebuilt houses, Mr. Kopplin, do we
know how many----
Senator Stevens. How many have actually been rebuilt?
Mr. Kopplin. Thousands have been rebuilt, Senator, but I do
not have a number on that because our program is designed to
give the resources that the individual needs to repair or
rebuild their houses. A requirement that they sign and obligate
themselves to committing to do that repair. But in terms of how
much progress that they have made, I do not have a specific
number on that at this time.
Senator Stevens. I am running over. I am sorry.
Chairman Landrieu. No. Go right ahead.
Senator Stevens. Is it possible for a person to go and get
the money to rebuild and rebuild it and then get repaid from
your program?
Mr. Kopplin. Yes. That is, in fact----
Senator Stevens. How many have done that?
Mr. Kopplin. Thousands, Senator. I do not know the specific
number, but you can travel through New Orleans and the
surrounding areas. Lots of folks have done those repairs, and
we wanted to make sure that pioneers who got it done, got it
done.
Senator Stevens. Are you holding up anything now waiting
for more money?
Mr. Kopplin. No, sir. The only thing that is on hold right
now is elevations, because first we had to resolve a FEMA and a
HUD elevation issue that Mr. Powell alluded to. And now,
because the HMGP money has not been approved yet, we are
evaluating, given this budget shortfall, whether those funds
are going to have to be transferred to run a local elevation
program, which would be very time-consuming and difficult for
homeowners, which we do not want to have happen, which is why
it is so important that this HMGP money be approved for
Louisiana.
Senator Stevens. By elevation, you have got to build so far
off the ground? Is that what you are talking about?
Mr. Kopplin. Yes, sir.
Senator Stevens. Thank you very much.
Mr. Powell. May I make a couple of comments?
Chairman Landrieu. Mr. Powell.
Mr. Powell. Directly to Senator Stevens' questions. This is
according to the U.S. Postal Service. Of all the flood-damaged
areas, there is a 68-percent vacancy rate. Of the wind-damaged
areas, there is a 4-percent vacancy rate. Furthermore, in fact,
just the flood-damaged areas, using the current projections we
have now, if we just funded that, there would be approximately
a $600 million surplus.
Chairman Landrieu. A $600 million surplus of what?
Mr. Powell. Of money.
Chairman Landrieu. In the CDBG for Louisiana?
Mr. Powell. Yes, ma'am.
Chairman Landrieu. OK. Let us get back to that. I have been
joined--Senator, I am sorry. Are you finished?
Senator Stevens. Yes.
Chairman Landrieu. Senator Pryor from Arkansas has joined
us. Thank you, Senator, very much. I do not know if you have
any questions, but if you do, it would be your time. Or I can
come back to you later.
OPENING STATEMENT OF SENATOR PRYOR
Senator Pryor. No, I do not have any questions, but I do
want to thank you for holding this hearing. It is very
important. I am sorry. I have been in a markup in the Armed
Services Committee since about 10 o'clock this morning, and it
is still going on. But, Senator Landrieu, I want to thank you
publicly for your work, and I want all the folks here to know,
especially the people from Louisiana, and really all over the
country, that Senator Mary Landrieu works every single day on
trying to rebuild her State after those hurricanes. And she has
done a fantastic job, and if I can speak candidly, she wears us
out every day trying to help her State. We appreciate it.
Chairman Landrieu. Well, I thank you, Senator Pryor. If we
could just get some numbers straight, we might be able to get
this job moving. But thank you very much.
I would like to get back to what Senator Stevens said, and
then we have got to move on to our next panel, because we have
two other panels. But let me ask you this, Mr. Powell, trying
to get some of these numbers. You are aware of the total amount
of money that Mississippi received in community development
block grants. What is that total? Is it $5.5 billion?
Mr. Powell. Five-point-five billion dollars.
Chairman Landrieu. If the State of Mississippi based on
their accurate numbers today uses the money to fund homeowners,
owner-occupied, at just flood, how much will that be? And what
will they have left? And I would like that data right now if
somebody on your staff has it.
Mr. Powell. They have two----
Chairman Landrieu. Hold on. I just want to say if they took
their $5.5 billion and gave everybody in Mississippi with
severe damage for flood only up to the $150,000 maximum,
reduced by insurance, etc., how much would that cost? Does
anybody on your staff know that?
Mr. Powell. We can get that for you, Senator. They have two
programs. Their eligibility requirements, they have no wind
reimbursement.
Chairman Landrieu. Correct. That is what I am saying. Just
flood.
Mr. Powell. It is homeowners only, and if you did not have
insurance----
Chairman Landrieu. And there is no rental, no wind, only
flood.
Mr. Powell. That is right. We can get you those numbers.
Then they have a second program that will address senior
citizens and also income.
Chairman Landrieu. But the reason that is important to
know, because we have to----
Mr. Powell. We can get that for you.
Chairman Landrieu [continuing]. Get down to apples and
apples and oranges and oranges, is because----
Mr. Powell. We can get that for you.
Chairman Landrieu. Right. If we gave Mississippi $5.5
billion and they are just going to do flood, and that costs,
let's say, $2 billion, they are going to have a $3.4 billion
surplus, and Senator Coburn is looking for some surplus money
right now. And so we have to figure out where there might be
some real surpluses that we could get to apply to shortfalls
elsewhere.
So I am going to press hard on that number.
Mr. Powell. We can get it for you.
Chairman Landrieu. And then we are going to take it to when
and where was wind decided to be excluded. I have not talked to
my Mississippi counterparts. They may not be aware that wind is
not being covered. There is a huge debate in Mississippi right
now among insurances, whether it is wind or flood. They may be
surprised----
Mr. Powell. Storm surge.
Chairman Landrieu [continuing]. To know that we are not
even going to attempt to cover some wind damage here. I do not
know. And then, finally, the question would be if the flood in
Mississippi only costs $2 billion and they got $5.5 billion,
what else are they able to use their money for that maybe
Louisiana or Texas or Alabama does not seem to have the option?
Let me end this panel, if I could. I thank you all.
Obviously, we have just begun, but I urge you to continue to
work together to see if we can get this program moving and
dollars found. Thank you.
Would the next panel of homeowners come forward?
[Pause.]
Chairman Landrieu. Thank you all very much.
Our next panel will consist of five citizens from the State
of Louisiana. All of them will share their experiences with the
Road Home Program that, as you all can imagine, has been
difficult and caused many anxieties. They are applicants who
have received their checks and are here prepared to talk about
how that process worked.
I would like to begin, if I could, with Tommy Tee Thomas, a
resident of the Lower 9th Ward.
Then we will hear from Connie Uddo, a New Orleans native
and resident of Lakeview. She has opened her home to neighbors
and friends as a Beacon of Hope Resource Center for her
neighborhood that was very hard hit, as was the Lower 9th Ward.
She also provides counseling and volunteer coordination for
others in her neighborhood, and so not only is she here to tell
her own story, but she knows many of her neighbors.
Our next witness is Debbie Gordon, President and Board
Member of the Chimney Wood Homeowners' Association. She serves
as a claims representative for the U.S. Railroad Retirement
Board. In May, she became the senior claims representative. She
has also worked in Houston, Texas, in the wake of Hurricane
Katrina.
Next we will hear from Frank Silvestri, a lifelong resident
of New Orleans. Mr. Silvestri began working with the Citizens'
Road Home Action Team assisting residents to understand the
intricacies and ins and outs of this program to help them
negotiate the best option for themselves and their family. He
is a graduate of Tulane Law School and has worked for the past
30 years with his firm in a general practice.
And, finally, we have Frank Trapani, President of New
Orleans Metropolitan Association of Realtors. Frank Trapani,
thank you very much for joining us. The realtors have played an
integral part in our rebuilding, and many of your members have
given many people in the region hope that we can return and
rebuild our communities. He has, of course, membership in many
organizations. We thank you.
I would like to ask you all to limit your remarks to 3
minutes each so that we will have questions and comments. Mr.
Thomas, you may begin.
TESTIMONY OF WALTER THOMAS,\1\ RESIDENT, LOWER 9TH WARD, NEW
ORLEANS, LOUISIANA
Mr. Thomas. First of all, I would like to thank Senator
Landrieu and the staff for inviting me here today.
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\1\ The prepared statement of Mr. Thomas appears in the Appendix on
page 86.
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My name is Walter Thomas, a/k/a Tommy Tee. I reside in the
Lower 9th Ward, New Orleans, Louisiana. I was a victim of
Hurricane Katrina. The community was flooded a second time when
Hurricane Rita landfalled in New Orleans. Residents of the
Lower 9th Ward, and my house was approximately 24 feet under
water. The estimation from the community said it was 28 feet,
so that is way over my house. So is that wind or water?
In the community surrounding us, I was closer to the levee,
the Industrial Canal where the levee was breached. That is why
the water was so high in my area. Since then, my house had been
demolished. I am currently residing in a FEMA handicapped
trailer. I have been seriously ill ever since the hurricane. I
applied for the Road Home Program in August 2006. The community
was informed everyone had to reapply again because the initial
applications were lost, and no further explanation was given by
the Road Home officials.
I reapplied in October 2006. I was never contacted to
submit my application and ownership. And to get to the next
phase, I took it on myself to walk into a Road Home office that
was newly open on Willard Street in New Orleans East, and there
the lady accepted me--I had to wait about an hour, but she took
time. I had everything professionally prepared with the
assistance of the Lower 9th Ward Homeowners' Association. They
was very instrumental in helping me put everything together so
that it can be professionally done. They did research. We took
our time, took about 3 weeks to do everything that needed to be
done. I commend them on doing a wonderful job.
The lady told me that I was the first one to walk into her
office where everything was perfect, and I felt good about
that. I felt like I had a check on the way. I do not know when
they came out to inspect the house, but it was completed.
During a recent hospital stay, which I was in the hospital
recently, I was contacted by Road Home to conclude my
application. But I was too ill to schedule and discuss the
procedure. Two days after coming out of surgery for stomach
cancer and colon cancer, I was taking pain medicine every 15 to
30 minutes. I had my cell phone on in the hospital so I could
tell my parents--I mean my brothers and sisters where I was
located.
I never heard from Road Home again. I called 30 to 40
times. Every time I called I get the same answer: ``Someone
will get back to you.'' It never happened. I gave up. I put it
in God's hands. I know we are a great city and we will survive.
And that is part of the story. That is it.
Chairman Landrieu. Thank you, Mr. Thomas. I very much
appreciate it. Ms. Uddo.
TESTIMONY OF CONNIE UDDO,\1\ DIRECTOR, ST. PAUL'S HOMECOMING
CENTER/BEACON OF HOPE RESOURCE CENTER, NEW ORLEANS, LOUISIANA
Ms. Uddo. Thank you, Senator Landrieu. First of all, I want
to thank you so much for putting this together because I feel
today that we are truly at a tipping point in our recovery.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Uddo appears in the Appendix on
page 88.
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Things have changed and evolved for me in my life since
opening my home up as the Beacon of Hope. I work with the
Episcopal Diocese of Disaster Response now, and we have a
homecoming response/recovery center in Lakeview. Lakeview is a
middle-class neighborhood that was flooded by the 17th Street
Canal breach.
I was asked to come here today as a voice of the people. I
am in gutted homes, trailers, and storm-ravaged yards. Every
day I see the depression and the hopelessness that has shifted
from the storm to the despair that our residents are in due to
the failures and the flaws of the Road Home Program. We have
lost thousands to this program, and we really need to prevent
losing thousands more.
Senator, as Director of the St. Paul's Homecoming Center,
our Lakeview Response/Recovery Center, I am the encourager, I
am the cheerleader that keeps telling people to hang in there,
your life will come back, it will be better, we will be a
community again. But, I can no longer tell people that. I
cannot look them in the eye and say that anymore. Our future is
suddenly that bleak. This is a 911 call from me.
I brought a stat board and I put a piece of paper up there
for you to show--and I think this might help Senator Stevens,
because some of the questions you were asking about that you
might draw from this. We have highlighted in the second box
under household summary, you see, we are supposed to be setting
the benchmark. We are a model for recovery. We are really doing
well in Lakeview supposedly. So 41 percent were rebuilt and
were in the process of rebuilding. But if you look in the
highlighted yellow box, 59 percent, 4,000 approximately, are
demolished and trailers for sale are inactive.
If you go down to the next box, the highlighted part, the
total Lakeview applications for Road Home Program is 4,421.
That is 60 percent right there are locked. Why are we inactive
60 percent? Because we are locked up in this Road Home Program.
Your numbers speak for themselves.
When we broke this down, the 531 people that have received
their money in Lakeview averages out to about 44 closings a
month. It will take 7 years for the balance of our residents to
get their money. My point is--and I brought pictures--can we
live without a post office for 7 years or no grocery store? Can
we live without a library, no public schools?
I brought personal testimonies, and anybody in here can
grab these before they leave. But this is the chronological
nightmare that our residents are in in this Road Home Program.
We are talking about shortfalls, but I am here to talk about
the $6 billion that is there that we cannot get out. Why cannot
our homeowners get this money? The hold-ups are just
ridiculous.
Now, I am working with a faith-based group, and I can tell
you volunteers are coming in by the thousands to help us. And
we have moved from gutting, and we are going into the
rebuilding phase. But because people do not have the money to
buy their sheetrock and their building materials--the Episcopal
Diocese is now fronting homeowners money to do what this Road
Home Program should be providing. And to me that is very sad,
and I see it in the faith-based. They are getting discouraged
because they feel like they are carrying the recovery on their
backs. They have shouldered this with us. And now they are
having to front the money. Something is just desperately wrong
there.
So I just wanted to share a story where a little girl came
to volunteer with her mom from Boston. She was 9 years old. And
she asked her mother on the third day of working in Lakeview
with the Beacon of Hope: ``Mom, when are we going back to
America?'' I said I was not going to do this, but it hit me
between the eyes. And I ask you, Subcommittee Members and the
Senators and our government: When are we coming back to
America? We really want to rejoin the country. We are real
American lives. We are a real American neighborhood. We want to
be real Americans again. But it is just not happening.
Chairman Landrieu. I thank you for that wonderful
testimony, and that is a magnificent way to end a beautiful,
heartfelt testimony, and that is why our Subcommittee is here,
to see what we can do to get people back in their homes. And as
you can see, the numbers are scrambled and jumbled. There is a
lot of information that needs to be cleared up.
In the next panel will be people that have the ability to
expedite this program, and most certainly those of us up here
can do that as well. Ms. Gordon.
TESTIMONY OF DEBBIE GORDON,\1\ PRESIDENT, CHIMNEY WOOD
HOMEOWNERS' ASSOCIATION, NEW ORLEANS, LOUISIANA
Ms. Gordon. My name is Debbie Gordon. My home is located in
New Orleans East. Our community received up to 10 feet of
water, in which 5 feet sat for 21 days. This was far more
catastrophic than the hurricane itself.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Gordon appears in the Appendix on
page 93.
---------------------------------------------------------------------------
The administration of the Road Home is dysfunctional and
bureaucratic. Why? Everyone knows what is needed, but
incompetency and politics is making it difficult for the
victims to be compensated. My personal experience with Road
Home has been discouraging, frustrating, and stressful.
Chairman Landrieu. You can take your time if you need to.
Ms. Gordon. The recent announcement regarding the shortfall
of money has created additional stress and fear. I applied for
my grant the same day it became available on the Web. It has
been 9 months since I started this process, and I am still
waiting. I attended the required interview. I had all the
documentation. I was subject to fingerprinting like we are the
criminals.
Again, we had to take it thinking this will all be over in
a short time and I can get my life back. I was displaced three
times and was dealing with the situation from afar, but I did
my part. My home was inspected, and I thought I was on my way
to an award letter. My application has been in the option
letter created status since October, and as of this date I have
never received my letter, nor do I have an appointment for any
final closing.
Being the president of our association, I stay informed of
all developments and heavily involved with the constant
changing developments. Our community of 74 homeowners is all in
the same situation. One out of 74 homeowners has made it to the
title company but has yet to be scheduled to sign and receive
any money. We have 74 homes that are sitting there, and we all
still have mortgages.
The responsiveness to inquiries with the Road Home
counselors is a waste of time because they do not know what is
going on themselves. They have been trained to remain customer
friendly and close with the script--``Remember, Louisiana wants
you to come home''--which is a slap in the face when you cannot
get answers. If I had to grade the responsiveness on this
program, it would receive an ``F.''
Expedite all awards like yesterday. Besides the Road Home
grants, our community needs major infrastructure repairs, basic
city services, hospitals, grocery stores, and everything that
goes with the quality of life we had before Hurricane Katrina.
My community had two hospitals before Hurriciane Katrina, and
as of this date we have none. I mean zero hospitals.
The State Government has been informed of the health crisis
but do not seem to care. We still do not have a major grocery
store chain and none that has committed to come back. I suggest
local, State, and Federal stop finding ways to delay the
process. The fraud prevention attachments with the Road Home
grants should be added to the administrators instead of the
citizens. We did not commit a criminal act, so why are you
treating us like we did?
If layers of verification are removed and you streamline
the process, you upgrade the computer system, this can happen
fairly quickly. And as far as Senator Coburn, who is gone, he
wants to know why Louisiana has a surplus. It is because the
people that are repairing have put that money back into the
surplus. And that surplus needs to go for infrastructure. And
to compare us to Mississippi--there is no comparison.
I am sorry for getting emotional, but this has been an
emotional time. I thank you for letting me come up here, and I
hope at least I can get my application processed today. Thank
you.
Chairman Landrieu. Thank you, Ms. Gordon. You may very
well, and I really appreciate it. It was tough for some of the
homeowners to come up and to have to testify in this way, but I
think that by getting this on the record, we will all be in a
better position to be able to meet the needs of this program
and to deal with it more with some more urgency. And that is
what my hope was when we called this hearing, and your
testimony will be very well received.
Mr. Silvestri.
TESTIMONY OF FRANK A. SILVESTRI,\1\ CO-CHAIRMAN, CITIZENS' ROAD
HOME ACTION TEAM (CHAT), NEW ORLEANS, LOUISIANA
Mr. Silvestri. Thank you, Senator Landrieu. The stories you
have just heard from the people on the panel are unfortunately
representative of a great many residents of the Greater New
Orleans area. There are 120,000 people waiting for grant
checks, and the program is running out of money. If it was not
bad enough before, the thought that after all this time of
waiting that they may not get their grants or their grants are
going to be cut is eliminating what little hope people have had
left.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Silvestri appears in the Appendix
on page 96.
---------------------------------------------------------------------------
Neither the State of Louisiana nor the Federal Government
should let this happen. The people that this program was
intended to help are hard-working, honest homeowners. They are
determined to rebuild their lives. But they have been stretched
to the breaking point, and their greatest enemy right now is
time. The longer it takes, the fewer of them will come back,
Senator Stevens. Many have come back. Many more want to return,
but they cannot do it without the money.
Our organization has worked with the LRA and the Office of
Community Development and the Road Home Program to try to help
make the program better, and we have found that the officials
involved, despite all the mistakes that have been made and all
of the wrong turns that have occurred, are good people who want
to do this job. They want to do it right. They are somewhat
hamstrung, however, by the program being stuck in the Stafford
Act, the Federal regulations they have to comply with under HUD
and FEMA, and policies that seem to change at the Federal level
every other week. That makes it really hard to plan and to
administer those funds.
There is red tape both at the State and Federal level, and
it needs to be eliminated. Whatever this Subcommittee could do
to identify the red tape that could be cut out, it needs to be
done.
The suspicion that Louisiana is treated differently from
other States, is borne out by the fact that unlike other
States, we are still not given the waiver of the 10-percent
match contribution for FEMA that was given to New York after
September 11, 2001, and Florida after Hurricane Andrew. The
damage estimates were wrong. FEMA was wrong. You only have to
go to New Orleans and the area to see that. The damage was
substantial, and it was greater than estimated. We just found
out this week that FEMA was wrong on the damage that was
estimated for the city.
This Subcommittee and Congress should stand squarely behind
the principle that no victim of this catastrophe should be left
behind or told that a grant has to be cut because there is not
enough money.
It is widely held that the canal walls failed because there
was shortsightedness in planning flood protection, that the
Federal levees and canals were not strong enough because we cut
corners there. Do not cut corners on the recovery. You are
going to compound one disaster with another.
There are 16,000 people living in FEMA trailers right now,
and we have another hurricane season coming. Last year, an
elderly woman that lives in a neighborhood right down the
street from me was about to move back into her home, and she
died because a tornado struck. And as I say, we are rapidly
coming up on hurricane season, and we are out of time.
Your help is urgently needed. The President said whatever
it takes, however long it takes. The job is not finished. We
need your help to rebuild New Orleans.
Chairman Landrieu. Thank you. Mr. Trapani.
TESTIMONY OF FRANK A. TRAPANI,\1\ PRESIDENT, NEW ORLEANS
METROPOLITAN ASSOCIATION OF REALTORS, NEW ORLEANS, LOUISIANA
Mr. Trapani. The Metropolitan New Orleans Association of
Realtors thanks you, Senator Landrieu, and the Subcommittee for
continuing to focus on the challenges caused by Hurricanes
Katrina and Rita and the levee failures. There is much to be
learned by this disaster, and we applaud your effort and
leadership.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Trapani appears in the Appendix
on page 111.
---------------------------------------------------------------------------
The second disaster that we are faced with is the
implementation of the Road Home Program. We have heard the
architects of the Road Home Program just this afternoon differ
on its building, whether or not we are covering wind damage,
flood damage, 106,000 people, 137,000 people, and people like
Ms. Uddo and Mr. Thomas here are having difficulties relating
to the indecision on the part of government. The problem is we
need money. We either have money or we do not have money or we
need to appropriate money.
The numbers are anywhere from 3 to 4, 5 times what is
appropriated or we have adequate funds. We are not instilling
confidence in the people who we need to, and the President did
say we would put them back in their homes and help repair New
Orleans as it was prior to the hurricane.
We need to repair the damage to people's properties that
the failure, again--and we cannot forget--the failure of the
levee system created.
Due to a lack of planning, jurisdictional issues, I think
it was politics, as someone said, we have approximately 17,000
people have received checks and an estimation of anywhere up to
another 120,000 people sitting and waiting for an opportunity
to receive the monies that they feel are due them to rectify
their housing needs.
We are sitting here with an obvious problem, administrative
problem. I look at the local SBA business--I look at local
banks on a daily basis providing SBA business loans on a day-
to-day basis that take a matter of days and weeks to approve.
Is it possible they could have been used to provide SBA
disaster funds? This would have allowed some funds to be
distributed throughout the Metropolitan New Orleans area and
may have saved some of the businesses that these folks talk
about that have gone bankrupt--the grocery store, the local
cleaners, the drug store, any number of local businesses that
make a community. They moved back to their respective
neighborhoods and have to travel miles to be able to go to a
grocery store. That is not living. That is existing. And the
people were living in a community and happy in their community
before the levees failed and created this problem
We are hoping that the Congress can as a result of looking
at this problem recognize that a comprehensive national
disaster plan be created.
Chairman Landrieu. If you would wrap up in 30 second.
Mr. Trapani. I thank you all for hearing us today, and I
just want to share with you that one other problem exists. When
these folks rebuild their houses, there is a serious insurance
problem out there. Rebuild the house, try to refinance it, and
then have to try to get homeowner's as a result of a flood that
they had nothing to do with leaves them in a situation where
they cannot afford to insure their properties.
I thank you all very much for taking the time to listen to
us.
Chairman Landrieu. Thank you very much. I have just a few
questions, and then we are going to move to the next panel, but
let me again thank each of you for your testimony.
Is it true--and let me just ask you, Ms. Uddo. Is it true
that homeowners throughout----
Senator Stevens. Excuse me. May I ask just one question?
Chairman Landrieu. I am sorry. Go right ahead.
Senator Stevens. I really do have to go. I am confused
about one thing, though. You all say you want checks given to
the applicants. We have never given checks to the applicants.
We have given approval to rebuild a home and drawn a check
payable to the applicant and the builder. Now, am I hearing
this wrong? Do you all want checks given to the applicants
without the house being under construction?
Mr. Thomas. No.
Mr. Silvestri. May I say, Senator, the problem is that the
State cannot administer the program efficiently if they are
hamstrung by Federal regulations and by inconsistent policy at
the Federal level.
Senator Stevens. It is Federal money, Mr. Silvestri. So I
do not want to hear that. You are going to have to live up to
the same regulations we live up to in all of our emergencies
and earthquakes and what-not, as I told you. But are you saying
that the Federal Government should draw a check to an applicant
before the house is even under construction?
Chairman Landrieu. That is the way the program was
designed.
Mr. Silvestri. Yes.
Chairman Landrieu. And that was the way the program was
designed in Mississippi, I understand. But I could be wrong
about that. But I believe that the check is a compensation
check to homeowners with X amount of damage, and the checks go
to the applicants. Now, that was originally done differently in
Louisiana, but now that has changed, I believe, to reflect----
Senator Stevens. And there is no obligation to rebuild?
Ms. Uddo. Oh, no, there----
Chairman Landrieu. Initially there was an obligation to
rebuild. Ms. Uddo, why don't you respond to that, if you could.
Ms. Uddo. You have options with Road Home. You can either
rebuild--take your money, rebuild, or you can relocate. You can
sell. You can turn over your right to your money to a new buyer
if a new buyer will live there for 3 years. There are
stipulations to that.
So my question to you, Senator, is: How can one start
construction if they do not have any money to start with?
Senator Stevens. Well, you get approval for construction,
and once you have the approval, the contractor starts building
your house.
Ms. Uddo. But a lot of contractors want money up front, and
you need money--electricians want to be paid right away. I
mean, it just does not work that way there.
Senator Stevens. Well, I have got to tell you, the
California earthquake, our earthquake, the enormous floods of
the West, they have not had the delays that you have had in
Louisiana. And I do not understand. We have all complied with
the same Federal regulations that you have got.
Now, I am sorry I have to go, but I do not understand the
concept that you can draw a check to someone to rebuild a house
or to replace a house and say they can walk off--could they go
to Texas with the money, buy a house there?
Ms. Uddo. No.
Senator Stevens. How do you know?
Chairman Landrieu. Well, not under our program initially
designed, but under the Mississippi program, there was no
requirement for rebuilding. And I keep bringing that up only
because in both situations we have done some different things
than we have done in the past, and not saying which one is
better or worse, but that it does exist. The compensation
program which was approved by HUD that does the CDBG
allocation----
Senator Stevens. Well, we had a fire that destroyed a lot
of homes, and James Lee Witt of FEMA went up with me, and we
reached an agreement on a policy that he put into effect that
they could rent trailers, bring them to the place, and they
started a self-help process, and they actually started their
own homes that same year. And they got checks payable as they
made progress on the home.
But this is a different concept, and I understand that to a
certain extent some of the problems about delay, if a person
just comes in and says I want the money to rebuild my house
with, there is no approval of the concept of rebuilding at all?
I mean, I thought the money was to rebuild New Orleans.
Chairman Landrieu. Go ahead.
Mr. Silvestri. The program changed, and I think it was an
effort--as it has been described to us by the LRA, it was a
hybrid program between compensation and rebuilding. And as
originally intended, they built in guarantees and incentives to
encourage rebuilding. And then HUD policy changed about 2
months ago, and they were told, it is our understanding, they
had to issue the payments in a lump sum.
Now, one other quick thing. What is holding up--for
example, the $1.4 or the $1.7 billion that FEMA will not
release, that is elevation grant money. That is money that you
have to have to elevate before you can rebuild, and now the
program is in a stall mode because if that money does not get
turned loose and people cannot know whether they are going to
get money to elevate, they cannot know whether or not they are
going to be able to rebuild, because you have to elevate first.
Right now the program is paralyzed or stalled because FEMA will
not release this additional money.
Senator Stevens. I understood elevation to be building so
far off the ground.
Mr. Trapani. Correct.
Senator Stevens. Right? Is that your elevation? Go over to
Rehoboth. They had a terrible disaster over there when the
ocean came in and destroyed so many houses. They built the area
below the homes, and then they built the homes above it. But
they did not have to build one before they built the other.
Mr. Silvestri. No, but you have to elevate before you
rebuild. If your house is damaged, you are going to want to
pick it up first and get the foundation under it before you
start working on it. You do not want to fix it up and then pick
it up and then damage it in the process of elevating it.
Ms. Gordon. Can I say something? Senator Stevens, most of
the people have put their roofs on, their windows, their
siding. All the Road Home really is is a gap from what the
insurance has not paid, and every grant that is given, we are
required to sign agreements stating that we are going to either
rebuild or comply with the laws that have been driven.
Senator Stevens. I understand that now. Thank you very
much.
Chairman Landrieu. Thank you, Senator, for coming.
Go ahead, Mr. Thomas.
Mr. Thomas. They have Option 1, 2, and 3. It is so
confusing. I understand Option 2. I own the property. Once they
agree--once the guy called me when I was in the hospital in
severe pain and could not even talk, he said, ``Hey, live or
die, we are ready to settle it right now.'' I said, ``Well, my
life is worth more than the money. I am going to live. Talk to
you later.''
But what happened is I selected Option 2. Option 2 states
that after the insurance money come out, whatever is left, they
cut a check and I give them the deeds to the property. And then
I can go anywhere I want to go and relocate, which I will stay
in New Orleans because we have family property. But to the end,
I would say I could not understand the rest of it. I could not
be where I was no way because I am right by the levee, would
never get a permit to build there again. That is my
understanding. You cannot meet the regulation, cannot get high
enough, cannot get enough money, $100,000 is not going to be a
$250,000 home. I am on a fixed income. I am hungry, broke.
Chairman Landrieu. But you are very good in your testimony,
Mr. Thomas, and let me----
Mr. Thomas. And I am healthy and I am blessed.
Chairman Landrieu. Thank you. And let me just add as we
wrap up this panel, and I have one or two questions. I think as
you all can sense from even Members who have been very focused
on the situation--Senator Stevens has been down there himself.
He has walked through several of the neighborhoods. Senator
Coburn has come down, I think not once but twice in terms of
hearings.
There is still a difficulty understanding the scope of the
disaster and the destruction of the neighborhoods, how broad it
is. And when you ask people are they coming home, they would
like to come home to a neighborhood. But as you said, if there
is no store, there is no drug store, there is no library, there
is no school, should they get their Road Home money and go live
somewhere else in the city? Or should they take the 40-percent
reduction and go move to Arkansas or Texas?
These are very difficult decisions, and I think there is a
way--obviously, there has got to be a way to make this more
simple.
But I want to ask for the record from homeowners, are
homeowners--and I understand this is true, but I want you to
say it, if it is, on the record. Are homeowners paying
mortgages since Hurricane Katrina and Rita hit, continuing to
pay mortgages?
Mr. Thomas. Yes.
Ms. Uddo. Yes.
Chairman Landrieu. Has there been any relief given? So
people are paying mortgages on homes that either do not exist
and have not been livable for 18 months?
Ms. Uddo. And you will see a lot of foreclosures. There are
numerous foreclosures. The mortgage companies are pressing in.
Mr. Thomas. The mortgage company waived a lot of those
notes with no interest, ma'am. They really did.
Ms. Uddo. Initially.
Mr. Thomas. They waived a lot of them.
Chairman Landrieu. You said in your case they did. In your
case, Ms. Uddo, they did not. In your case, Ms. Gordon?
Ms. Gordon. No, they----
Ms. Uddo. They worked with you for a short term, most
homeowners. They gave us all a few----
Ms. Gordon. Three months.
Ms. Uddo. Three months, but, now for months, for at least a
year, people have been having to pay their mortgages. Now, the
SBA loans that people have taken out, those are coming due now,
so you have some cases where you have someone paying rent
somewhere else, mortgage, plus now they are accountable for
their SBA loan.
Chairman Landrieu. And what is the Federal Government
telling you about the SBA loans? Do they have to be paid back
with your grant or not?
Mr. Silvestri. Yes.
Chairman Landrieu. So once you get your grant, you have to
pay your small business loan back with the money that you got
from the grant.
Mr. Thomas. And that hurts.
Ms. Gordon. I cannot answer that because I have not been
there.
Chairman Landrieu. Well, that is my understanding.
Mr. Silvestri. There is a coordination of the SBA benefits.
There was some confusion about that initially, but I think that
has been worked out now with LRA and SBA. But, yes, some of
the--if the homeowner knows how to do it right and they are
getting the--I think they are getting good instruction now,
they can maximize their recovery there Road Home and also get
SBA. But they do have to pay a portion of the SBA back.
Ms. Uddo. One thing I wanted you to know--and Senator
Stevens--that third option was you can sell your property to
the State, which is a whole other issue because now we have
homeowners deeply concerned about what the States is going to
do with those properties. And so we have homeowners actually
holding up on rebuilding because they know that neighbor next
door is selling to the State. And, that is just a whole other
problem that is keeping people from rebuilding. So I did not
know if you knew that.
Chairman Landrieu. Thank you. Thank you all very much.
Let's call the next panel. The last panel this afternoon is
made up today of Nelson Bregon of HUD, David Maurstad of FEMA,
Susan Elkins from the Office of Community Development, and
Isabel Reiff from ICF International, which is the contractor.
As you all are taking your seats, I will introduce you because
of our time constraints.
Nelson Bregon is Assistant Deputy Secretary for Disaster
Policy and Response at the Department of Housing and Urban
Development. He is responsible for oversight of the $18 billion
in disaster grants primarily focused on long-term disaster
recovery in the Gulf Region.
Our next panelist is David Maurstad, Director of Mitigation
and Administrator of FEMA. He is responsible for leading some
of America's multihazard risk reduction programs, working to
secure the homeland from natural hazards.
Susan Elkins is our next panelist. She is the Executive
Director of the Office of Community Development. She was born
and raised in Baton Rouge, has been committed to the State of
Louisiana throughout her career. She has been working for the
State since 1972, and she now serves as the point person in the
Office of Community Development that runs the program.
And our last witness is Isabel Reiff. She is a Senior Vice
President of ICF. She is the Chief Program Executive Officer of
the Road Home Program.
If we could begin, Mr. Bregon, with you, please, and if you
would limit your testimony to 3 minutes, we are going to have
some questions, if we could, about the panel before and the
program status.
TESTIMONY OF NELSON R. BREGON,\1\ ASSISTANT DEPUTY SECRETARY
FOR DISASTER POLICY AND RESPONSE, U.S. DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT
Mr. Bregon. Thank you, Chairman Landrieu. My name is Nelson
Bregon. I am a Senior Executive Service career employee with
the U.S. Department of Housing and Urban Development. I started
my career with HUD 27 years ago under Secretary Moon Landrieu.
I think you know who I am talking about.
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\1\ The prepared statement of Mr. Bregon appears in the Appendix on
page 113.
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Chairman Landrieu. I have heard of him before.
[Laughter.]
Mr. Bregon. Yes. I have recently been appointed as the
Assistant Deputy Secretary for Disaster Policy and Response by
Secretary Alfonso Jackson to coordinate HUD's disaster response
across the Department, with other Federal agencies, and to deal
with any red tape that perhaps shows up as we undertake this
great task.
Previously, I was the General Deputy Assistant Secretary in
the Office of Community Planning and Development, and that is
the office responsible for the Community Development Block
Grant Program. So I have vast experience in disaster funding. I
worked directly with the Empire State Development Corporation
and the Lower Manhattan Development Corporation dealing with
the September 11 supplemental appropriation of about $3.5
billion.
In the past year, through the tireless efforts of State and
local government staff in Louisiana, Mississippi, Texas,
Alabama, and Florida, and with more than $3.1 billion expended,
the groundwork has been laid for a sustained recovery. Yet many
challenges remain, especially in the State of Louisiana.
In response to the disasters, President Bush signed the
first supplemental appropriation providing $11.5 billion on
December 30, 2005. Within 1 month, Madam Chairman, HUD
Secretary Jackson allocated the funds, and the State of
Louisiana received the maximum 54 percent that we have been
talking about.
Last June, after the President signed the second CDBG
supplemental providing an additional $5.2 billion, the
Secretary once again promptly allocated these funds to the
affected States--again providing the maximum amount allowed by
law to the State of Louisiana. In total, HUD has allocated a
combined $10.4 billion in supplemental CDBG funding recovery
funds, the maximum amount allowed by the law. Today, almost $2
billion has been expended.
The CDBG supplemental appropriations acts passed by
Congress were clear in their intent and extraordinary in the
flexibility provided to the States, far beyond the traditional
nature of such supplemental block grant funding. Congress
directed that HUD shall, the Secretary shall waive any statute,
any regulation with his control. There were only four
exceptions that he could not waive. That was civil rights, fair
housing, environmental laws, and Davis-Bacon.
Chairman Landrieu. You have 10 seconds, please.
Mr. Bregon. In the case of Louisiana's Road Home Program
for homeowners, the State's action plan set aside about $6.3
billion based on local estimates. Two factors largely
determined the program's delivery cost. These were the
estimated number of households and the amount per grant.
I tell you what, Madam Chairman. I have a lot more to say,
so why don't I stop and we will open it for questions and then
perhaps I would be able to answer all your questions.
Chairman Landrieu. Thank you. Mr. Maurstad.
TESTIMONY OF DAVID I. MAURSTAD,\1\ ASSISTANT ADMINISTRATOR,
MITIGATION DIRECTORATE, FEDERAL EMERGENCY MANAGEMENT AGENCY,
U.S. DEPARTMENT OF HOMELAND SECURITY
Mr. Maurstad. Good afternoon, Chairman Landrieu and Ranking
Member Stevens. I am David Maurstad, Assistant Administrator
for FEMA's Mitigation Directorate. FEMA's Hazard Mitigation
Grant Program provides States and communities with post-
disaster funds to help them implement long-term mitigation
measures. By funding such activities, the Federal Government
helps communities rebuild stronger and safer.
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\1\ The prepared statement of Mr. Maurstad appears in the Appendix
on page 116.
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As early as the fall of 2005, Louisiana recognized
mitigation's value and set aside $250 million in HMGP funds to
encourage local governments to plan for and prioritize
traditional mitigation activities such as planning, elevation,
and acquisition. Since then, the State has invested valuable
time trying to incorporate the bulk of their HMGP funds, over
$1 billion, into Road Home, a State-designed program to
compensate storm victims with HUD CDBG funds.
Unfortunately, Louisiana did not consult FEMA while
developing Road Home; consequently, they have encountered
difficulties trying to combine the two programs. In August
2006, FEMA worked with HUD and Louisiana in a flexible and
accommodating manner, offering creative options to address
barriers to progress. Ultimately, the State's decision to
exempt senior citizens from a Road Home penalty, again, without
consulting FEMA, makes their Road Home Program unworkable
because the exemption conflicts with the Stafford Act's
nondiscrimination in disaster assistance section, which states,
``Relief and assistance activities shall be accomplished in an
equitable and impartial manner, without discrimination on the
grounds of race, color, religion, nationality, sex, age,
disability, English proficiency, or economic status.''
The primary goals and objectives of the two programs are
different. The Road Home is a compensation program to
individual homeowners; whereas, HMGP helps communities reduce
their vulnerability to future events with Federal grants. Last
October, Louisiana submitted a single HMGP application for over
$1 billion to acquire properties under Road Home. The proposal
did not indicate whether the properties met HMGP requirements,
nor did it describe how such requirements could be met. Without
this information and considerable legal barriers, FEMA denied
the application.
Madam Chairman, I would like to provide two copies of
letters related to these matters for the hearing record.\1\
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\1\ The letters submitted by Mr. Maurstad appears in the Appendix
on page 227.
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Community-wide mitigation educates citizens about hazards,
motivates them to incorporate mitigation into their land-use
decisions, and galvanizes them to reconstruct stronger. I have
visited the Gulf Coast many times since August 2005, and I know
the victims are frustrated, and they do not see progress. I
have heard firsthand similar testimony as was shared by the
previous panel.
As a former Mayor, State Senator, and Lieutenant Governor,
I am no stranger to the challenges that sometimes accompany
Federal funds. My experience also makes me confident that a
concerted Louisiana-FEMA focus on HMGP will result in effective
mitigation activities across the State. If the Road Home and
the HMGP operate separately, FEMA can provide the State's
communities with the resources they need to reduce future
property damage and loss of life during future events--our
collective mission. With Road Home's attention to homeowners
and HMGP's community focus, Louisiana-FEMA collaboration can
result in a whole that is greater than the sum of its parts.
Thank you, Madam Chairman, and I look forward to your
questions.
Chairman Landrieu. Thank you. Ms. Elkins.
TESTIMONY OF SUSAN ELKINS,\2\ EXECUTIVE DIRECTOR, OFFICE OF
COMMUNITY DEVELOPMENT, STATE OF LOUISIANA
Ms. Elkins. My name is Susan Elkins, and I am here today
representing the Office of Community Development. The Office of
Community Development is the fiscal agent responsible for
administering the disaster relief funds provided by Congress.
We are now in our 11th month of the program since the launch of
the recovery program.
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\2\ The prepared statement of Ms. Elkins appears in the Appendix on
page 123.
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As of May 23, over 139,000 applications have been received,
115,000 appointments have been held, 60,000 benefit option
letters have been sent to homeowners, 41,000 homeowners have
selected their option, and we have closed 20,000 homeowners as
of today. We have spent over $1 billion to date that has been
paid out to homeowners. We will close 10,000 cases this month,
and we will continue to ensure that those closings increase as
the throughput allows.
We have heard a lot about how slow the program is going,
and I would like to address that.
To determine how fast or slow the Louisiana program is
moving, there is no precedent for this type of program. The
only possible comparison might be how Mississippi did in the
same amount of time after starting its program.
Mississippi began their program in January 2006. Louisiana
began their program in June 2006, approximately 6 months later.
This was due to the need for the additional disaster recoveries
that were provided by Congress in June 2006. Mississippi has
done a fantastic job in their program.
In the materials that we have provided, you will find a
chart that compares activities that are common to both
Louisiana and Mississippi programs starting from the time that
each State selected its management contractor and tracking
progress on a month-by-month basis.\1\ By the ninth contract
month, Louisiana sent over 30,000 more option letters than
Mississippi, and we closed more than 15 times the number of
closing. In the same time frame, Mississippi received
approximately 17,000 applications, while Louisiana had 110,000
applications--six times more.
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\1\ The chart referred to appears in the Appendix on page 134.
---------------------------------------------------------------------------
At this time I would like to offer some observations for
you to consider in examining how you can aid the process and
using Federal funds for future disaster recovery, and first is
data. There is great incompatibility in the data that is
generated and kept by individual Federal agencies, all of which
gather information, but there are no standard conventions for
the most basic entries like street addresses, and there is no
standing agreements to provide that information, and it takes
months to get that information. Much time has been wasted
because the information needed from these agencies to make
informed decisions was not available or reliable or usable. And
an example is the first time we used the FEMA data, which we
had to have for verification. We could only get a 10-percent
match right for the verification of duplication of benefits.
The second is redundancy. We have lost count of how many
times the same work has been done but by different agencies.
Here is one example: The same properties have been inspected
four and five times--first by FEMA, then by SBA, then the
private insurers, then the Road Home, and then the lenders. So
homeowners are frustrated.
There is also the duplication of benefits, which is huge.
The Stafford Act requires us to find and quantify funds from
other sources--including private sources--that are presumed to
be duplications. The need to do this has slowed down the
recovery enormously. Just try getting insurance information
from hundreds of private insurance companies for tens of
thousands of payments that are made each day, daily, because
they change, from an industry that is already overwhelmed and
they have no business incentives to provide this information to
the State. Sometimes it would take 90 days or longer. It is a
nightmare.
I urge you to revisit the duplication of benefit
provisions, particularly as they relate to private as opposed
to Federal funds, and how they apply to loans such as those
from SBA as opposed to grants.
Last, but not least, the Federal regulations inhibit rapid
response to disasters. Given time, I could recite a litany of
examples of how these well-intended regulations--and they are
well intended. Clearly, they are needed in normal times, but
they hamper and hamstring recovery efforts tremendously.
Chairman Landrieu. Can you wrap up, please?
Ms. Elkins. The CDBG rules differ from FEMA rules, SBA
rules. SBA rules differ from DOT rules. And that is why we are
not able to leverage these dollars to use them in the recovery
process. We have worked now for a year with FEMA to be able to
use the HMGP dollars, and to date, we have not been able to use
those.
So I will wrap it up.
Chairman Landrieu. Thank you, and you can submit the rest
for the record. Finally, Ms. Reiff.
TESTIMONY OF ISABEL REIFF,\1\ SENIOR VICE PRESIDENT, ICF
INTERNATIONAL, INC., AND CHIEF PROGRAM EXECUTIVE, LOUISIANA
ROAD HOME PROGRAM
Ms. Reiff. Good afternoon, Chairman Landrieu. I am Isabel
Reiff. I am a Senior Vice President of ICF and the Chief
Program Executive for the Louisiana Road Home Program.
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\1\ The prepared statement of Ms. Reiff appears in the Appendix on
page 135.
---------------------------------------------------------------------------
Before I begin, let me say that it has been a privilege to
work on this program with the citizens of Louisiana. We take
the responsibility very seriously to both deliver the grants to
these individuals who have suffered so much and to do it with
compassion. The resilience of these homeowners has been nothing
short of inspiring, and I give you my word that we will reach
out to each of the individuals here and to everyone else whom
we have provided with anything less than A-plus service.
We appreciate the opportunity to discuss the challenges and
issues that ICF and our team face in delivering the largest
recovery program in our Nation's history. To summarize some of
the accomplishments, as of last night we have received, as
Susan Elkins just said, about 139,000 applications and just
under 108,000 homeowners have scheduled or held appointments.
By this time next week, we will have submitted 70,000 award
letters and we will have held more than 20,000 closings, which
result in a commitment of $1.5 billion to homeowners. At this
rate and with no further program changes, 90,000 eligible
homeowner applicants will receive their Road Home funds by the
end of this year.
Madam Chairman, it is important to understand that this
program has been delivered over the past 7 months in a very
challenging post-disaster environment during which many changes
have been made to the program, including alterations to the
calculation of benefits, the additions of new categories of
eligible recipients, and a revised process of establishing pre-
storm value.
I want to be very clear when I say that we recognize that
these changes were made in a very honest effort to improve the
program and for the benefit of the homeowner. But the fact is
that there has been an extraordinary number of midcourse
corrections to the underlying delivery model of this program in
an environment that would not tolerate an interruption in
service. We need stability.
From a delivery perspective, it is difficult to satisfy a
homeowner if we cannot give them definitive information in a
changing environment. We are very concerned about the quality
of our customer service, and we continuously work to improve
it. However, the program is ahead of schedule, and I am afraid
that the accelerate pace has come with a price.
Madam Chairman, because there is often confusion in the
press and elsewhere about when ICF started operations in
Louisiana under this contract, let me take a moment to provide
some context. We signed our contract in June 2006, a full 10
months after the hurricanes. Under the terms of the contract,
the production phase, the actual processing of claims did not
begin until this past October, 14 months after the hurricanes.
So we have only been in production for 7 months, and it is in
those 7 months that we have achieved the accomplishments that
we have just recently referred to.
This program has already been audited seven times by State
and Federal authorities without major concern. We are
comfortable with that degree of transparency. We have always
operated that way. We have, of course, faced significant and
unprecedented challenges. We are proud of our achievements as
we accelerated the final stage of getting grants to the
homeowners.
I should point out that originally the Road Home contract
required ICF to complete the process of closing on all of these
transactions by the end of 2008. We now project that much of
this work will be done and most grants awarded a full year
earlier than the original schedule, assuming that there are no
additional changes to the program and that there is an
application deadline.
We do appreciate that nothing would be fast enough for the
thousands of homeowners anxious to return to their homes, and
we are constantly seeking ways to accelerate our progress and
improve our performance.
Finally, as part of our obligation to inform the State of
program progress and outlook, ICF has been providing weekly
reports on Road Home progress since November.
So, in summary, I would like to emphasize the following
points: The Road Home Program is a recovery challenge
unprecedented in its scope and complexity. It was designed and
approved by the State of Louisiana, and ICF has been
implementing this program at an accelerated pace for the past 7
months, but only for 7 months. The program constantly evolves,
and we have made dozens of complex changes in delivery with
virtually no interruption in service. And despite all of these
challenges, working together, with all programs stakeholders, I
believe that dramatic progress has been made and most eligible
homeowners will have been compensated by year-end, much earlier
than required under our contract.
I would be pleased to answer any questions that you may
have.
Chairman Landrieu. Well, thank you. There are going to be
many questions. There will be many submitted to the record,
and, of course, you all will be given a time frame to respond.
Our time will only allow just a few questions this afternoon.
I would like to begin with our HUD representative, if I
could. Since HUD is in the business of providing housing--and
this is the greatest challenge we have on the Gulf Coast, is
getting our people back into their homes. This has been focused
today on homeowners, but, of course, we have renters and we
have multifamily homes. These are predominantly single detached
homes that we are talking about. But if the 54-percent cap on
the initial allocation between Mississippi and Louisiana had
not been placed, has HUD yet done a calculation as to what the
actual amount of money would be needed to cover the programs
that have been described today? And if you have done it, give
me what the numbers are. If you have not done it, are you able
to do it? Because I am going to ask you to do those
calculations?
Mr. Bregon. Madam, again it is a matter of how do you look
at damage and what is it that the State wants to accomplish.
Right now, for instance, the program that has been described by
the State is an eligible activity, whether they want to do the
basic compensation, whether they want to do wind mitigation.
Those are all eligible activities----
Chairman Landrieu. With all due respect, that is very clear
right now, what the Louisiana program is and what the
Mississippi program is, and it is getting clearer as this
hearing is going on. There is still a question as to whether we
are trying to cover wind and flood. But have you done those
calculations?
Mr. Bregon. We do have the numbers of how many----
Chairman Landrieu. What are they, do you know?
Mr. Bregon [continuing]. Units are--well, they fluctuate
between 105,000 and 150,000, which was what the chart showed
that we had before.
Chairman Landrieu. There is a big difference between
105,000 and 150,000, and so what I would like to do is, without
pressing today, I am going to submit a letter to HUD to ask the
question: If there was no arbitrary cap placed by Congress,
which I acknowledge was done, just looking at the program that
has been described, up to $150,000 grant for flood only, what
would that number be? Since you all are in the business of
housing, I am going to ask the housing officials to give us
that number.
Now, Mr. Maurstad, if I could ask you, you stated in your
testimony that the State never consulted you about the use of
hazard mitigation grants. Could you go over that again? I do
not know if, Ms. Elkins, you would be the appropriate one from
the State to respond, but that is not my understanding. But if
you could please repeat that?
Mr. Maurstad. Yea, ma'am. When the Road Home Program was
developed, we were not consulted as to how the Hazard
Mitigation Grant Program would be involved in the Road Home
Program.
Chairman Landrieu. But was Don Powell consulted about that
issue?
Mr. Maurstad. That I am not sure.
Chairman Landrieu. Was HUD consulted about that issue?
Mr. Bregon. No, ma'am.
Chairman Landrieu. OK. So the State arbitrarily on their
own decided to--the hazard mitigation money, there was not
conversation----
Mr. Maurstad. No. In all fairness, we began working with
the State in the fall of 2005 with the first $250 million that
they allocated to the various parishes for traditional hazard
mitigation work. There was a lock-in amount that was provided
to the State that they would have approximately $1.47 billion
available totally for hazard mitigation. As they have discussed
in testimony today, they were looking at incorporating the
balance of the Hazard Mitigation Grant Program into Road Home.
Chairman Landrieu. Because they thought they would be short
on the Road Home money and needed to use that $1.5 billion to
reach their target number of homes covered.
Mr. Maurstad. That very well may be the case. That is not a
conversation that I have had with----
Chairman Landrieu. But you all did not have that
conversation with them at the time?
Mr. Maurstad. No. There is--the State----
Chairman Landrieu. So after they included that, then
several months later you all came back and said that really
could not be done that way.
Mr. Maurstad. In June last year, we began discussions of
trying to look at how we could incorporate HMGP----
Chairman Landrieu. And we are almost in June this year, and
that has not been resolved yet, has it?
Mr. Maurstad. We began working with them. There was
concern. Administrator Paulison created a separate working
group with HUD, the State, myself. That began working in
August. We started going through the issues until they then
made the decision--again, without consulting with us--about the
nondiscrimination issue.
Chairman Landrieu. But the bottom line is that FEMA and
Secretary--with Secretary Paulison and FEMA and the State have
been trying to work this out for 1 year, almost 1 year, and it
is not working out yet. Is that basically correct?
Mr. Maurstad. We have been working on it with them trying
to find ways to make it work for 1 year.
Chairman Landrieu. All right. Let me ask you, Ms. Elkins,
if I could, this chart from the Lakeview Homeowners'
Association--I am actually going to ask either the City
Planning Commission in the region to potentially, if they can,
provide charts like this for all the neighborhoods, because I
think this really kind of gets us to where we need to be. You
all both testified that you think within a year the
applications will be out and people will have their checks. But
according to this one neighborhood projection, it will take 7
years for the homeowners that have applied in Lakeview to
receive their checks. So I am confused as to what this record
should reflect. Do you disagree with these numbers?
Ms. Elkins. I have not had time to look at it, but just
glancing at it, I think what they did is they looked at the
money from the 20 months, with the storm, and we just received
the money. So I do not think that this is accurate. We have
actually been in production for 7 months. We have only had a
contract for 11 months. We had the pilot program first. So our
goal is to move at least 10,000 each month.
Chairman Landrieu. OK. Well, I am going to ask you, if you
do not mind, just for this record to take this document and see
if you could work with the Lakeview Association and upgrade it,
and if you all could submit that for the record, because if it
can be done for this one neighborhood, there are dozens and
dozens of neighborhoods throughout, not just the New Orleans
region, but St. Bernard and Cameron Parish, etc. And it will
give people some hope as to when their applications can be
finalized.
One final question to the coordinator. You stated the only
missing piece to the original contract were benchmarks for
option letters sent to homeowners and for closings completed.
You stated you spoke with several housing experts to determine
what you should use as appropriate time frames for closings,
that you looked at Mississippi's program because they contained
similar tasks as Louisiana's. You looked at title searches
verifications. But even as you found it difficult to find a
precedent time frame for the completion of option letters and
closings, why did you fail to consult with advocacy groups who
have been working in the field with Hurricane Katrina victims
such as some of the low-income housing organizations, lawyers'
committees to determine a suitable time frame? Or did you
consult with these and other groups? Ms. Reiff, this is to you.
Ms. Reiff. The time frames for the program and for the
contract were provided by the State of Louisiana. We do meet
with local groups. We have a complete outreach effort. We work
with nonprofits. We use and rely on nonprofits to reach out to
special needs populations, to encourage them to come in and to
provide them services. And we work often with different
organizations to make sure that the materials we are providing
are usable, are transparent, and are helpful. So, yes, I do
believe we speak with a variety of groups all the time.
Chairman Landrieu. OK. Are there any other comments that
you would like to make for the record? I will give you each 30
seconds before we close, if there is anything you think you
have not answered or responded to.
Mr. Bregon. Yes, Madam Chairman, if I may. Again, I want to
focus on the fact that the State is the responsible agent here
for the administration of the CDBG funds. HUD has been very
flexible, and we have worked very closely with the State. We
feel that the State has the capacity to run this program. They
have been running the CDBG program at the State level for over
20 years.
The other thing I would like to mention is the issue of the
environmental reviews. Our position at HUD was we advised the
staffers that perhaps they should give the authority to the
Secretary to waive the NEPA, the environmental requirements,
which is one of the stumbling blocks, barriers----
Chairman Landrieu. Was that waiver given?
Mr. Bregon. It was not, Madam.
Chairman Landrieu. Not given, OK.
Mr. Bregon. That is correct.
Chairman Landrieu. Mr. Maurstad, any closing remarks?
Mr. Maurstad. Three very quick points.
First of all, for the record, we want to make sure that
there is an understanding that the numbers for the housing were
not a FEMA estimate. FEMA provided HUD data call information
that HUD used with a number of other pieces of information to
come up with the housing numbers. So if we could clear that
up----
Chairman Landrieu. Let me try to clear that up for the
record. So FEMA is saying do not use our numbers, use HUD
numbers?
Mr. Maurstad. No. They asked us for information. We
provided that information with a series of caveats on what that
information was used for and what that information meant. HUD
fully understood that and used that in their overall
calculations. But they are not strictly FEMA numbers.
Chairman Landrieu. Because this Subcommittee is going to
find the right numbers, who should we go to to get the real
numbers about how many homes were severely damaged in
Mississippi and in Louisiana? Just tell me, who should we go
to?
Mr. Maurstad. Well, since you have asked my opinion, it
would seem to me that there should be a group from the LRA,
from HUD, and from Mr. Powell's office that should sit down and
be tasked with coming up with a set of numbers that they can
all agree with.
My second point would be that it is important that we
emphasize that the critical obstacle with HMGP folding into the
Road Home Program is the nondiscrimination section violation of
the Stafford Act, and so we would like to be able to provide
additional information to you on that.
And last is to emphasize that I believe in my working with
both the State--is that the HMGP and Road House programs can
run parallel and meet the objectives of both. We can run the
HMGP program outside but parallel to the Road Home Program and
achieve what I believe the Road Home is trying to accomplish
with the program inside Road Home.
Chairman Landrieu. And you are testifying based on the
current funding? You do not think this program will be short so
they can take out the hazard mitigation and run it parallel?
Mr. Maurstad. I have not looked at that because that is--I
mean, our money is available to them.
Chairman Landrieu. Correct, but you do not know if you take
out the one--your testimony is that you do not know that if you
take out the $1.5 billion hazard mitigation that the program
then would have enough money to cover all the----
Mr. Maurstad. I have not studied the overall needs of the
Road Home program.
Chairman Landrieu. OK. That is fine.
All right. Ms. Elkins, any closing comments?
Ms. Elkins. I think that there needs to be greater
consistency in the Federal regulations, and I would like, for
the record, to ask how long would it take to run this parallel
program with HMGP dollars for the homeowners?
Mr. Maurstad. Do you want me to respond, ma'am?
Chairman Landrieu. Go ahead.
Mr. Maurstad. We have already been working with the
parishes on the first $250 million. We worked initially with
the parishes to make sure that--only three parishes had local
mitigation plans that they needed to be able to be eligible for
the funds. We worked with them. All of the parishes and
communities except one now have that. They are poised to be
able to implement the Hazard Mitigation Grant Program in this
disaster, just like Louisiana has done in previous disasters.
This is not a new program. The State has administered this
program in the past. They understand the rules, the
regulations. They have done it before, and I believe we can
work with them and do it again.
Chairman Landrieu. OK. I thank you all very much. The time
has come for us to conclude the hearing. Let me thank all of
our panelists. Let me particularly thank the homeowners who
gave such heartfelt testimony and helped us to focus on the
importance of getting this program fixed, getting the data
right, the numbers right, the coverage right. I do not want any
homeowner in Louisiana or Mississippi to believe that this
government is not going to fulfill its promises. We do not know
at this point how exactly that will be done, but this
Subcommittee and I believe the full Committee of Homeland
Security and Governmental Affairs wants to make sure that this
program works better, more completely, more quickly, and more
efficiently to help build these communities. And we are going
to continue to have hearings until we can figure out the
numbers, figure out the coverage, and accelerate the help for
the people that are depending on us to do that.
Thank you so much.
Mr. Bregon. Madam Chairman, if I may, I would like to
request to include my prepared statement.
Chairman Landrieu. Your statements will be recorded to the
record and additional questions will be submitted by us very
shortly.
Thank you. The meeting is adjourned.
[Whereupon, at 5:16 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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